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ENGROSSED SENATE
BILL NO. 1670 By: McCortney, Prieto, Jett,
Coleman, Hamilton, and
Alvord of the Senate
and
McEntire of the House
[ pharmacy benefits management - pharmacy
reimbursement - rule promulgation - audit - notice
and reporting - fines and fees - recouped funds -
emergency ]
BE IT ENACTED BY THE PEOPLE OF THE STATE OF OKLAHOMA:
SECTION 1. AMENDATORY 59 O.S. 2021, Section 356.1, is
amended to read as follows:
Section 356.1. A. For purposes of the Pharmacy Audit Integrity
Act, “pharmacy benefits manager ” or “PBM” means a person, business,
or other entity that performs pharmacy benefits management. The
term includes a person or entity acting for a PBM in a contractual
or employment relationship in the perfo rmance of pharmacy benefits
management for a managed care company, nonprofit hospital, medical
service organization, insurance company, third -party payor, or a
health program administered by a department of this state.
B. The purpose of the Pharmacy Audit Integrity Act is to
establish minimum and uniform standards and criteria for the audit
of pharmacy records by or on behalf of certain entities.
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C. The Pharmacy Audit Integrity Act shall apply to any audit of
the records of a pharmacy conducted by a manag ed care company,
nonprofit hospital, medi cal service organization, insurance company,
third-party payor, pharmacy benefits manager, a health program
administered by a department of this state, or any entity that
represents these companies, groups, or depar tments.
D. The Attorney General may promulgate rules to implement the
provisions of the Pharmacy Audit Integrity Act.
SECTION 2. AMENDATORY 59 O.S. 2021, Section 356.2, is
amended to read as follows:
Section 356.2. A. The entit y conducting an audit of a pharmacy
shall:
1. Identify and specifically describe the audit and appeal
procedures in the pharmacy contract. Prescription claim
documentation and record -keeping requirements shall not exceed the
requirements set forth by the Oklahoma Pharmacy Act or other
applicable state or federal laws or regulations;
2. Give the pharmacy written notice by certified letter to the
pharmacy and the pharmacy ’s contracting agent, including
identification of specific prescription numbers and fi ll dates to be
audited, at least two (2) weeks fourteen (14) calendar days prior to
conducting the audit, including, but not limited to, an on -site
audit, a desk audit, or a wholesale purchase audit, request for
documentation related to the dispensing of a prescription drug or
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any reimbursed activity by a pharmacy provider; provided, however,
that wholesale purchase audits shall require a minimum of thirty
(30) calendar days’ written notice. For an on-site audit, the audit
date shall be the date the on -site audit occurs. For all other
audit types, the audit date shall be the date the pharmacy provides
the documentation requested in the audit notice. The pharmacy shall
have the opportunity to reschedule the audit no more than seven (7)
calendar days from the date designated on the original audit
notification;
3. Not interfere with the delivery of pharmacist services to a
patient and shall utilize every reasonable effort to minimize
inconvenience and disruption to pharmacy operations during the audit
process;
4. Conduct any audit involving clinic al or professional
judgment by means of or in consultation with a licensed pharmacist;
5. Not consider as fraud any clerical or record -keeping error,
such as a typographical error, scrivener ’s error or computer err or,
including, but not limited to, a miscalculated day supply,
incorrectly billed prescription written date or prescription origin
code, and such errors shall not be subject to recoupment. The
pharmacy shall have the right to submit amended claims
electronically to correct clerical or record -keeping errors in lieu
of recoupment. To the extent that an audit results in the
identification of any clerical or record -keeping errors such as
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typographical errors, scrivener ’s errors or computer errors in a
required document or record, the pharmacy shall not be subject to
recoupment of funds by the pharmacy benefits manager unless the
pharmacy benefits manager can provide proof of intent to commit
fraud. A person shall not be subject to criminal penalties for
errors provided for in this paragraph without proof of intent to
commit fraud;
6. Permit a pharmacy to use the records of a hospital,
physician, or other authorized practitioner of the healing arts for
drugs or medicinal supplies written or transmitted by any means of
communication for purposes of validating the pharmacy record with
respect to orders or refills of a legend or narcotic drug;
7. Not include the dispensing fee amount or the actual invoice
cost of the prescription dispensed in a finding of an audi t
recoupment unless a prescription was no t actually dispensed or a
physician denied authorization of a dispensing order;
8. Audit each pharmacy under identical standards, regularity
and parameters as other similarly situated pharmacies and all
pharmacies owned or managed by the pharmacy benefits manager
conducting or having conducted the audit;
9. Not exceed one (1) year from the date the claim was
submitted to or adjudicated by a managed care company, nonprofit
hospital or medical service organization, i nsurance company, third -
party payor, pharmacy benefits manager, a health program
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administered by a department of this state, or any entity that
represents the companies, groups, or departments for the period
covered by an audit;
10. Not schedule or initia te an audit during the first seven
(7) calendar days of any month unless otherwise consented to by the
pharmacy;
11. Disclose to any plan sponsor whose claims were included in
the audit any money recouped in the audit; and
12. Not require pharmacists to break open packaging labeled
“for single-patient-use only”. Packaging labeled “for single-
patient-use only” shall be deemed to be the smallest package size
available; and
13. Upon recoupment of funds from a pharmacy, refund first to
the patient the porti on of the recovered funds that were originally
paid by the patient.
B. 1. Any entity that conducts wholesale purchase review
during an audit of a pharmacist or pharmacy shall not require the
pharmacist or pharmacy to provide a full dispensing report.
Wholesaler invoice reviews shall be limited to verification of
purchase inventory specific to the pharmacy claims paid by the
health benefits plan or pharmacy benefits manager conducting the
audit.
2. Any entity conducting an audit shall not identify or lab el a
prescription claim as an audit discrepancy when:
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a. the National Drug Code for the dispensed drug is in a
quantity that is a subunit or multiple of the drug
purchased by the pharmacist or pharmacy as supported
by a wholesale invoice,
b. the pharmacist or pharmacy dispensed the correct
quantity of the drug according to the prescription,
and
c. the drug dispensed by the pharmacist or pharmacy
shares all but the last two digits of the National
Drug Code of the drug reflected on the supplier
invoice.
3. An entity conducting an audit shall accept as evidence,
subject to validation, to support the validity of a pharmacy claim
related to a dispensed drug:
a. redacted copies of supplier invoices in the
pharmacist’s or pharmacy’s possession, or
b. invoices and any supporting documents from any
supplier as authorized by federal or state law to
transfer ownership of the drug acquired by the
pharmacist or pharmacy.
4. An entity conducting an audit shall provide, no later than
five (5) business days after the date of a request by the pharmacist
or pharmacy, all supporting documents the pharmacist ’s or pharmacy’s
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purchase suppliers provided to the health benefits plan issuer or
pharmacy benefits manager.
C. A pharmacy shall be allowed to provide the pharmacy ’s
computerized patterned medical records or the records of a hospital,
physician, or other authorized practitioner of the healing arts for
drugs or medicinal supplies written or transmitted by any means of
communication for purposes of supporting the pharmacy rec ord with
respect to orders or refills of a legend or narcotic drug.
D. The entity conducting the audit shall not audit more than
fifty prescriptions, with specific date of service, per calendar
year. The annual limit to the number of prescription claims audited
shall be inclusive of all audits, including any prescription -related
documentation requests from the health insurer, pharmacy benefits
manager or any third -party company conducting audits on behalf of
any health insurer or pharmacy benefits manager during a calendar
year.
E. If paper copies of records are requested by the entity
conducting the audit, the entity shall pay twenty -five cents ($0.25)
per page to cover the costs incurred by the pharmacy. The entity
conducting the audit shall provide th e pharmacy with accurate
instructions, including any required form for obtaining
reimbursement for the copied records.
F. The entity conducting the audit shall:
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1. Deliver a preliminary audit findings report to the pharmacy
and the pharmacy’s contracting agent within forty-five (45) calendar
days of conducting the audit;
2. Allow the pharmacy at least ninety (90) calendar days
following receipt of the preliminary audit findings report in which
to produce documentation to address any discrepancy found dur ing the
audit; provided, however, a pharm acy may request an extension, not
to exceed an additional forty -five (45) calendar days;
3. Deliver a final audit findings report to the pharmacy and
the pharmacy’s contracting agent signed by the auditor within te n
(10) calendar days after receipt of additional documentation
provided by the pharmacy, as provided for in Section 356.3 of this
title;
4. Allow the pharmacy to reverse and resubmit claims
electronically within thirty (30) days of receipt of the final au dit
report in lieu of the auditing entity recouping discrepant claim
amounts from the pharmacy;
5. Not recoup any disputed funds until after final disposition
of the audit findings, including the appeals process as provided for
in Section 356.3 of this ti tle; and
6. Not accrue interest during the audit and appeal period.
G. Each entity conducting an audit shall provide a copy of the
final audit results, and a final audit report upon request, after
completion of any review process to the plan sponsor.
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H. 1. The full amount of any recoupment on an audit shall be
refunded to the plan sponsor. Except as provided for in paragraph 2
of this subsection, a charge or assessment for an audit shall not be
based, directly or indirectly, on amounts recouped.
2. This subsection does not prevent the entity conducting the
audit from charging or assessing the responsible party, directly or
indirectly, based on amounts recouped if both of the following
conditions are met:
a. the plan sponsor and the entity conducting th e audit
have a contract that explicitly s tates the percentage
charge or assessment to the plan sponsor, and
b. a commission to an agent or employee of the entity
conducting the audit is not based, directly or
indirectly, on amounts recouped.
I. Unless superseded by state or federal law, auditors shall
only have access to previous audit reports on a particular pharmacy
conducted by the auditing entity for the same pharmacy benefits
manager, health plan or insurer. An auditing vendor contracting
with multiple pharmacy benefits managers or health i nsurance plans
shall not use audit reports or other information gained from an
audit on a pharmacy to conduct another audit for a different
pharmacy benefits manager or health insurance plan.
J. An audit shall be c onsidered null and void if the entity
conducting the audit fails to follow any of the requirements under
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this section. Any violation of this section by a pharmacy benefits
manager or auditing entity shall be deemed a violation of the
Pharmacy Audit Integr ity Act.
SECTION 3. AMENDATORY 59 O.S. 2021, Section 356.3, is
amended to read as follows:
Section 356.3. A. Each entity conducting an audit shall
establish a written appeals process under which a pharmacy may
appeal an unfavorable preliminary audit report and/or final audit
report to the entity.
B. Following an appeal, if the entity finds that an unfavorable
audit report or any portion thereof is unsubstantiated, the entity
shall dismiss the audit report or the unsubstantiated portion of the
audit report without any f urther action.
C. Any final audit report, following the final audit appeal
period, with a finding of fraud or willful misrepresentation shall
be referred to the district attorney having proper jurisdiction or
the Attorney General for prosecution upon completion of the appeals
process.
D. This act does section and Section 356.2 of this title do not
apply to any audit, review or investigation that is initiated based
on or that involves fraud, willful misrepresentatio n or abuse so
long as the auditing entity provides in writing at the time of the
audit, a clear and conspicuous declaration that the audit is being
conducted under suspicion of fraud, willful misrepresentation, or
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abuse and a statement of facts that suppor ts the reasonable
suspicion. Any monies recouped from a null and void audit shall be
returned to the affected pharmacy within fourteen (14) calendar
days.
E. Any entity conducting an audit based on or that involves
fraud, willful misrepresentation, or ab use shall provide to the
Office of the Attorney General:
1. Notice at least two (2) business days prior to beginning
performance of an audit under this section;
2. A preliminary report within thirty (30) days of performing
the audit; and
3. A final report within thirty (30) days following the closure
of the final audit appeal period.
F. The Attorney General shall have unrestricted access to any
documents relevant to an audit that is based on or that involves
fraud, willful misrepresentation, or abuse.
G. The Attorney General may levy a civil or administrative fine
not less than One Hundred Dollars ($100.00) and not greater than Ten
Thousand Dollars ($10,000.00) for each violation of this section and
assess any other penalty or remedy authorized by law.
SECTION 4. AMENDATORY 59 O.S. 2021, Section 357, is
amended to read as follows:
Section 357. As used in this act section through Section 360 of
this title:
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1. “Covered entity” means a nonprofit hospital or medical
service organization, insurer, health coverage benefit plan, or
health maintenance organization ; a, health program administered by
the state in the capacity of provider of providing health coverage;,
or an employer, labor union, or other entity organized in the state
group of persons that provides health coverage to covered
individuals who are employed or reside in the persons in this state.
This term does not include a health benefit plan that provides
coverage only for accidental injury, specified disease, hospital
indemnity, disability income, or other limi ted benefit health
insurance policies and contracts that do not include prescription
drug coverage;
2. “Covered individual” means a member, participant, enrollee,
contract holder or policy holder or beneficiary of a covered entity
who is provided health coverage by the covered entity. A covered
individual includes any dependent or other person provided health
coverage through a policy, contract or plan for a covered
individual;
3. “Department” means the Oklahoma Insurance Department;
4. “Maximum allowable cost”, or “MAC”, or “MAC list” means the
list of drug products delineating the maximum per -unit reimbursement
for multiple-source prescription drugs, medical product products, or
device devices including, but not limited to:
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a. average acquisition cost, including the national drug
acquisition cost,
b. average manufacturer price,
c. average wholesale price,
d. brand effective rate or generic effective rate,
e. discount indexing,
f. federal upper limits,
g. wholesale acquisition cost, and
h. any other term that a pharmacy benefits manager or an
insurer of a health benefit plan may use to establish
reimbursement rates to a pharmacist or pharmacy for
pharmacist services;
5. “Multisource drug product reimbursement ” (reimbursement)
means the total amount paid to a pharmacy inclusive of any reduction
in payment to the pharmacy, excluding prescription dispense fees;
6. “Office” means the Office of the Attorney General;
7. “Pharmacy benefits management ” means a service provided to
covered entities to facilitate the provision of prescription drug
benefits to covered individuals within the state, including
negotiating pricing and other terms with drug manufacturers and
providers. Pharmacy benefits management may include any or all of
the following services:
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a. claims processing, retail network management and
payment of claims to pharmacies for prescription drugs
dispensed to covered individuals,
b. administration or management of pharmacy discount
cards or programs,
c. clinical formulary development and management
services,
c. d. rebate contracting and administration,
d. e. certain patient compliance, therapeutic intervention
and generic substitution programs, or
e. f. administration or management of mail -order pharmacy
programs, or
g. disease management programs;
7. 8. “Pharmacy benefits manager ” or “PBM” means a person,
business, or other entity that performs pharmacy benefits
management. The term includes shall include a person or entity
acting for on behalf of a PBM in a contractual or employment
relationship in the performance of pharmacy benefits management for
a managed care company, nonprofit hospital, medical service
organization, insurance company, third -party payor, or a health
program administered by an agency or department of this state;
8. 9. “Plan sponsor” means the employers, insurance companies,
unions and health maintenance organizations or any other entity
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responsible for establishing, maintaining, or administering a health
benefit plan on behalf of covered individuals; and
9. 10. “Provider” means a pharmacy licensed by the State Board
of Pharmacy, or an agent or representative of a pharmacy, including,
but not limited to, the pharmacy ’s contracting agent, which
dispenses prescription drugs or devices to co vered individuals.
SECTION 5. AMENDATORY 59 O.S. 2021, Section 358, is
amended to read as follows:
Section 358. A. In order to provide pharmacy benefits
management or any of the services included under the definition of
pharmacy benefits management in this state, a pha rmacy benefits
manager or any entity acting as one in a contractual or employment
relationship for a covered entity shall first obtain a license from
the Oklahoma Insurance Department, and the Department may charge a
fee for such licensure.
B. The Department shall establish, by regulation, licensure
procedures, required disclosures for pharmacy benefits managers
(PBMs) and other rules as may be necessary for carrying out and
enforcing the provisions of this act the Oklahoma Pharmacy Act . The
licensure procedures shall, at a minimum, include the completion of
an application form that shall include the name and address of an
agent for service of process, the payment of a requisite fee, and
evidence of the procurement of a surety bond.
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C. The Department may subpoena witnesses and information. Its
compliance officers may take and copy records for investigative use
and prosecutions. Nothing in this subsection shall limit the Office
of the Attorney General from using it s investigative demand
authority to investigate and prosecute violations of the law.
D. The Department may suspend, revoke or refuse to issue or
renew a license for noncompliance with any of the provisions hereby
established or with the rules promulgated by the Department; for
conduct likely to mislead, deceive or defraud the public or the
Department; for unfair or deceptive business practices or for
nonpayment of a renewal fee or fine. The Department may also levy
administrative fines for each count of w hich a PBM has been
convicted in a Depart ment hearing.
E. The Attorney General may promulgate rules to implement the
provisions of Sections 357 through 360 of this title.
SECTION 6. AMENDATORY 59 O.S. 2021, Section 360, is
amended to read as follows:
Section 360. A. The pharmacy benefits manager shall, with
respect to contracts between a pharmacy benefits manager and a
provider, including a pharmacy service administrative organization:
l. Include in such contracts the specific sources utilized to
determine the maximum allowable cost (MAC) pricing of the pharmacy,
update MAC pricing at least every seven (7) calendar days, and
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establish a process for providers to readily access the MAC list
specific to that provider;
2. In order to place a drug on the MAC list, ensure that the
drug is listed as “A” or “B” rated in the most recent version of the
FDA’s Approved Drug Products with Therapeutic Equivalence
Evaluations, also known as the Orange Book, and the drug is
generally available for purchase by pharmacies in the state f rom
national or regional wholesalers and is not obsolete;
3. Ensure dispensing fees are not included in the calculation
of MAC price reimbursement to pharmacy providers;
4. Provide a reasonable administration appe als procedure to
allow a provider, a provider ’s representative and a pharmacy service
administrative organization to contest reimbursement amounts within
fourteen (14) business days of the final adjusted payment date. The
pharmacy benefits manager shall n ot prevent the pharmacy or the
pharmacy service administrative organization from filing
reimbursement appeals in an electronic batch format. The pharmacy
benefits manager must respond to a provider, a provider ’s
representative and a pharmacy service admin istrative organization
who have contested a reimbursement amount through this procedure
within ten (10) business days. The pharmacy benefits manager must
respond in an electronic batch format to reimbursement appeals filed
in an electronic batch format. The pharmacy benefits manager shall
not require a pharmacy or pharmacy services administrative
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organization to log into a system to upload individual claim appeals
or to download individual appeal responses. If a price update is
warranted, the pharmacy be nefits manager shall make the change in
the reimbursement amount, permit the dispensing pharmacy to reverse
and rebill the claim in question, and make the reimbursement amount
change retroactive and effective for all contracted providers; and
5. If a below-cost reimbursement appeal is denied, th e PBM
shall provide the reason for the denial, including the National Drug
Code (NDC) number from and the name of the specific national or
regional wholesalers doing business in this state where the drug is
currently in stock and available for purchase by the dispensing
pharmacy at a price below the PBM ’s reimbursement price. If the
pharmacy benefits manager cannot provide a specific national or
regional wholesaler where the drug can be purchased by the
dispensing pharmacy at a price below the pharmacy ben efits manager’s
reimbursement price If the NDC number provided by the pharmacy
benefits manager is not available below the acquisition cost
obtained from the pharmaceutical wholesaler from whom the dispensing
pharmacy purchases the majority of the prescription drugs that are
dispensed, the pharmacy benefits manager shall immediately adjust
the reimbursement amount, permit the dispensing pharmacy to reverse
and rebill the claim in question, and make the reimbursement amount
adjustment retroactive and effecti ve for all contracted providers.
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B. The pharmacy benefits manager shall not place a drug on a
MAC list, unless there are at least two therapeutically equivalent,
multiple-source drugs, generally available for purch ase by
dispensing retail pharmacies from national or regional wholesalers.
C. In the event that a drug is placed on the FDA Drug Shortage s
Database, pharmacy benefits managers shall reimburse claims to
pharmacies at no less than the wholesale acquisition cost for the
specific NDC number being di spensed.
D. The pharmacy benefits manager shall not require
accreditation or licensing of providers, or any entity licensed or
regulated by the State Board of Pharmacy, other than by the State
Board of Pharmacy or federal government entity as a condition for
participation as a network provider.
D. E. A pharmacy or pharmacist may decline to provide the
pharmacist clinical or dispensing services to a patient or pharmacy
benefits manager if the pharmacy or pharmacist is to be paid less
than the pharmacy’s cost for providing the pharmacist clinical or
dispensing services.
E. F. The pharmacy benefits manager shall provide a dedicated
telephone number, email address and names of the personnel with
decision-making authority regarding MAC appeals and pricing.
SECTION 7. It being immediately necessary for the preservation
of the public peace, health or safety, an emergency is hereby
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declared to exist, by reason whereof this act shall take effect and
be in full force from and after its passage and a pproval.
Passed the Senate the 12th day of March, 2024.
Presiding Officer of the Senate
Passed the House of Representatives the ____ day of __________,
2024.
Presiding Officer of the House
of Representatives