83R2108 PMO-F
By: Hunter H.B. No. 1358
A BILL TO BE ENTITLED
AN ACT
relating to procedures for certain audits of pharmacists and
pharmacies.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
SECTION 1. Chapter 843, Insurance Code, is amended by
adding Subchapter O to read as follows:
SUBCHAPTER O. AUDITS OF PHARMACISTS AND PHARMACIES
Sec. 843.501. DEFINITIONS. In this subchapter:
(1) "Auditor" means a health maintenance organization
or a pharmacy benefit manager that provides pharmacy-related
services for health maintenance organization enrollees that is
performing an on-site audit or a desk audit of a pharmacist or
pharmacy or another entity performing an on-site audit or a desk
audit of a pharmacist or pharmacy on behalf of the organization or
manager.
(2) "Desk audit" means an audit conducted by an
auditor at a location other than the location of the pharmacist or
pharmacy. The term includes an audit performed at the auditor's
offices during which the pharmacist or pharmacy provides requested
documents for auditor review by hard copy or by microfiche, disk, or
other electronic media.
(3) "On-site audit" means an audit that is conducted
at:
(A) the location of the pharmacist or pharmacy;
or
(B) another location at which the records under
review are stored.
Sec. 843.503. AUDIT REQUIRING PROFESSIONAL JUDGMENT. An
on-site audit or a desk audit involving a pharmacist's clinical or
professional judgment must be conducted in consultation with a
pharmacist licensed by the Texas State Board of Pharmacy.
Sec. 843.504. ACCESS TO PHARMACY AREA. An auditor may not
enter the pharmacy area unless escorted by the pharmacist-in-charge
as defined by Section 551.003(29), Occupations Code.
Sec. 843.505. VALIDATION USING CERTAIN RECORDS AUTHORIZED.
A pharmacist or pharmacy that is being audited may:
(1) validate a prescription, refill, or change in a
prescription with a prescription that complies with rules adopted
under Section 554.051, Occupations Code; and
(2) validate the delivery of a prescription with a
written record of a hospital, physician, or other authorized
practitioner of the healing arts.
Sec. 843.506. CALCULATION OF RECOUPMENT; USE OF
EXTRAPOLATION PROHIBITED. (a) An auditor may not calculate the
amount of a recoupment based on:
(1) an absence of documentation the pharmacist or
pharmacy is not required by law to maintain; or
(2) an error that does not result in actual financial
harm to the enrollee, health maintenance organization, or pharmacy
benefit manager.
(b) A health maintenance organization or pharmacy benefit
manager may not require extrapolation audits as a condition of
participation in a contract, network, or program for a pharmacist
or pharmacy.
(c) An auditor may not use extrapolation to complete an
on-site audit or a desk audit of a pharmacist or pharmacy.
Notwithstanding Subsection (a)(2), the amount of a recoupment must
be based on the actual overpayment or underpayment and may not be
based on an extrapolation.
(d) An auditor may not include a dispensing fee amount in
the calculation of an overpayment unless:
(1) the fee was a duplicate charge; or
(2) the prescription for which the fee was charged:
(A) was not dispensed; or
(B) was dispensed without the prescriber's
authorization.
Sec. 843.507. CLERICAL OR RECORDKEEPING ERROR. An
unintentional clerical or recordkeeping error, such as a
typographical error, scrivener's error, or computer error, found
during an on-site audit or a desk audit:
(1) is not prima facie evidence of fraud; and
(2) may not be the basis of a recoupment from a
pharmacist or pharmacy without proof of intent to commit fraud.
Sec. 843.508. UNIFORM STANDARDS REQUIRED. An auditor must
conduct an on-site audit or a desk audit of similarly situated
pharmacists or pharmacies under the same audit standards.
Sec. 843.509. ACCESS TO PREVIOUS AUDIT REPORTS. An auditor
may have access to audit reports of a pharmacist or pharmacy that
were prepared only for the health maintenance organization or
pharmacy benefit manager for which the auditor is conducting an
audit.
Sec. 843.510. COMPENSATION OF AUDITOR. A health
maintenance organization, pharmacy benefit manager, or other
auditor may not base compensation paid to the individual or entity
performing an on-site audit or a desk audit on a percentage of the
amount the health maintenance organization, pharmacy benefit
manager, or other auditor is entitled to recover as the result of
the audit.
Sec. 843.511. CONCLUSION OF AUDIT; SUMMARY; PRELIMINARY
AUDIT REPORT. (a) At the conclusion of an on-site audit or a desk
audit, the auditor shall:
(1) provide to the pharmacist or pharmacy a summary of
the audit findings; and
(2) allow the pharmacist or pharmacy to respond to
questions and alleged discrepancies, if any, and comment on and
clarify the findings.
(b) Not later than the 30th day after the date the audit is
concluded, the auditor shall send by certified mail, return receipt
requested, to the pharmacist or pharmacy a preliminary audit report
stating the results of the audit, including explanations for and
the amount of recoupment claimed.
(c) The pharmacist or pharmacy may, by providing
documentation or otherwise, challenge a result or remedy a
discrepancy stated in the preliminary audit report not later than
the 30th day after the date the pharmacist or pharmacy receives the
report.
Sec. 843.512. FINAL AUDIT REPORT. Not later than the 90th
day after the date the pharmacist or pharmacy receives a
preliminary audit report under Section 843.511, the auditor shall
send by certified mail, return receipt requested, to the pharmacist
or pharmacy a final audit report that states:
(1) a summary of the pharmacist's or pharmacy's
explanation and documentation, if any, submitted in response to the
preliminary audit report; and
(2) the audit results, including a description of all
alleged discrepancies and explanations for and the amount of
recoupments claimed after consideration of the pharmacist's or
pharmacy's response to the preliminary audit report.
Sec. 843.513. APPEAL OF FINAL AUDIT REPORT; AUDIT OUTCOME
REPORT. (a) An auditor shall establish a process for a pharmacist
or pharmacy to wholly or partly appeal a final audit report.
(b) An auditor shall use the National Council for
Prescription Drug Programs' data interchange standards for
pharmacy claim submission to evaluate audited claims and appeals
under the process established under Subsection (a).
(c) On the date a final audit report is found wholly or
partly unsubstantiated after an appeal under the process
established under Subsection (a), the auditor shall reject the
report, wholly or partly, as applicable.
(d) Not later than the 30th day after the date an appeal
under the process established under Subsection (a) is concluded,
the auditor shall send by certified mail, return receipt requested,
to the pharmacist or pharmacy an audit outcome report that
includes:
(1) a summary of the pharmacist's or pharmacy's
arguments and documentation, if any, submitted in response to the
final audit report; and
(2) the audit results and recoupments claimed after
consideration of the pharmacist's or pharmacy's response to the
final audit report.
Sec. 843.514. RECOUPMENT AND INTEREST CHARGED AFTER AUDIT.
If an audit under this subchapter is conducted, the health
maintenance organization or pharmacy benefit manager:
(1) may recoup from the pharmacist or pharmacy an
amount based only on a final audit report or, if appealed under the
process established under Section 843.513(a), an audit outcome
report; and
(2) may not accrue or assess interest on an amount due
until the later of the date the pharmacist or pharmacy receives the
final audit report or, if appealed under the process established
under Section 843.513(a), the date of the audit outcome report.
Sec. 843.515. MEDIATION. (a) A pharmacist or pharmacy
aggrieved by an audit outcome report may require an auditor to
participate in mediation under Chapter 154, Civil Practice and
Remedies Code.
(b) The pharmacist or pharmacy must elect mediation and
notify the auditor not later than the 30th day after the date the
pharmacist or pharmacy receives the audit outcome report. The
mediation must be completed not later than the 90th day after the
date the pharmacist or pharmacy receives the audit outcome report.
(c) The mediation must be conducted by a person qualified as
an impartial third party under Section 154.052, Civil Practice and
Remedies Code.
Sec. 843.516. REMEDIES NOT EXCLUSIVE. This section may not
be construed to waive a remedy at law available to a pharmacist or
pharmacy.
Sec. 843.517. WAIVER PROHIBITED. The provisions of this
subchapter may not be waived, voided, or nullified by contract.
Sec. 843.518. LEGISLATIVE DECLARATION. It is the intent of
the legislature that the requirements contained in this subchapter
regarding audit of claims to providers who are pharmacists or
pharmacies apply to all health maintenance organizations and
pharmacy benefit managers unless otherwise prohibited by federal
law.
SECTION 2. Section 843.3401, Insurance Code, is transferred
to Subchapter O, Chapter 843, Insurance Code, as added by this Act,
redesignated as Section 843.502, Insurance Code, and amended to
read as follows:
Sec. 843.502 [843.3401]. AUDIT OF PHARMACIST OR PHARMACY;
NOTICE; GENERAL PROVISIONS. (a) An auditor [A health maintenance
organization or a pharmacy benefit manager that administers
pharmacy claims for the health maintenance organization may not use
extrapolation to complete the audit of a provider who is a
pharmacist or pharmacy. A health maintenance organization may not
require extrapolation audits as a condition of participation in the
health maintenance organization's contract, network, or program
for a provider who is a pharmacist or pharmacy.
[(b) A health maintenance organization or a pharmacy
benefit manager that administers pharmacy claims for the health
maintenance organization] that performs an on-site audit or a desk
audit under this chapter of a provider who is a pharmacist or
pharmacy shall provide the provider reasonable notice of the audit
and accommodate the provider's schedule to the greatest extent
possible. The notice required under this subsection must be in
writing and must be sent by certified mail to the provider not later
than the 15th day before the date on which the on-site audit is
scheduled to occur.
(b) Not later than the seventh day after the date a
pharmacist or pharmacy receives notice under Subsection (a), the
pharmacist or pharmacy may reschedule an on-site audit or a desk
audit to a date not later than the 14th day after the date the audit
is initially scheduled. On agreement of the pharmacist or pharmacy
and the auditor, the audit may be rescheduled to a date after the
14th day after the date the audit is initially scheduled.
(c) Unless the pharmacist or pharmacy consents in writing,
an auditor may not schedule or have an on-site audit or a desk audit
conducted:
(1) before the 30th day after the date the pharmacist
or pharmacy receives notice under Subsection (a);
(2) more than once annually; or
(3) during the first seven calendar days of a month.
(d) A pharmacist or pharmacy may be required to submit
documents in response to a desk audit not earlier than the 30th day
after the date the auditor requests the documents.
(e) A contract between a pharmacist or pharmacy and a health
maintenance organization or a pharmacy benefit manager must state
detailed audit procedures. If a health maintenance organization or
pharmacy benefit manager proposes a change to the audit procedures
for an on-site audit or a desk audit, the organization or manager
must notify the pharmacist or pharmacy in writing of a change in an
audit procedure not later than the 60th day before the effective
date of the change.
(f) The list of the claims subject to audit must be provided
in the notice under Subsection (a) to the pharmacist or pharmacy and
may identify the claims only by the prescription numbers or a date
range for prescriptions subject to the audit.
(g) If the auditor:
(1) in an on-site audit or a desk audit applies random
sampling procedures to select claims for audit, the sample size may
not be greater than 50 individual prescription claims; or
(2) conducts an on-site audit or a desk audit related
to a specific issue, the number of individual prescription claims
subject to the audit may not be greater than 50 and, notwithstanding
Subsection (f), may be identified only by prescription number.
(h) After an audit is initiated, a pharmacist or pharmacy
may electronically resubmit a disputed claim if the deadline for
submission of a claim under Section 843.337 has not expired.
SECTION 3. Chapter 1301, Insurance Code, is amended by
adding Subchapter F to read as follows:
SUBCHAPTER F. AUDITS OF PHARMACISTS AND PHARMACIES
Sec. 1301.251. DEFINITIONS. In this subchapter:
(1) "Auditor" means an insurer or a pharmacy benefit
manager that provides pharmacy-related services for the insurer's
insureds that is performing an on-site audit or a desk audit of a
preferred provider that is a pharmacist or pharmacy or another
entity performing an on-site audit or a desk audit of a preferred
provider that is a pharmacist or pharmacy on behalf of the insurer
or manager.
(2) "Desk audit" means an audit conducted by an
auditor at a location other than the location of the pharmacist or
pharmacy. The term includes an audit performed at the auditor's
offices during which the pharmacist or pharmacy provides requested
documents for auditor review by hard copy or by microfiche, disk, or
other electronic media.
(3) "On-site audit" means an audit that is conducted
at:
(A) the location of the pharmacist or pharmacy;
or
(B) another location at which the records under
review are stored.
Sec. 1301.253. AUDIT REQUIRING PROFESSIONAL JUDGMENT. An
on-site audit or a desk audit involving a pharmacist's clinical or
professional judgment must be conducted in consultation with a
pharmacist licensed by the Texas State Board of Pharmacy.
Sec. 1301.254. ACCESS TO PHARMACY AREA. An auditor may not
enter the pharmacy area unless escorted by the pharmacist-in-charge
as defined by Section 551.003(29), Occupations Code.
Sec. 1301.255. VALIDATION USING CERTAIN RECORDS
AUTHORIZED. A pharmacist or pharmacy that is being audited may:
(1) validate a prescription, refill, or change in a
prescription with a prescription that complies with rules adopted
under Section 554.051, Occupations Code; and
(2) validate the delivery of a prescription with a
written record of a hospital, physician, or other authorized
practitioner of the healing arts.
Sec. 1301.256. CALCULATION OF RECOUPMENT; EXTRAPOLATION
PROHIBITED. (a) An auditor may not calculate the amount of a
recoupment based on:
(1) an absence of documentation the pharmacist or
pharmacy is not required by law to maintain; or
(2) an error that does not result in actual financial
harm to the insured, insurer, or pharmacy benefit manager.
(b) An insurer or pharmacy benefit manager may not require
extrapolation audits as a condition of participation in a contract,
network, or program for a pharmacist or pharmacy.
(c) An auditor may not use extrapolation to complete an
on-site audit or a desk audit of a pharmacist or pharmacy.
Notwithstanding Subsection (a)(2), the amount of a recoupment must
be based on the actual overpayment or underpayment and may not be
based on an extrapolation.
(d) An auditor may not include a dispensing fee amount in
the calculation of an overpayment unless:
(1) the fee was a duplicate charge; or
(2) the prescription for which the fee was charged:
(A) was not dispensed; or
(B) was dispensed without the prescriber's
authorization.
Sec. 1301.257. CLERICAL OR RECORDKEEPING ERROR. An
unintentional clerical or recordkeeping error, such as a
typographical error, scrivener's error, or computer error, found
during an on-site audit or a desk audit:
(1) is not prima facie evidence of fraud; and
(2) may not be the basis of a recoupment from a
pharmacist or pharmacy without proof of intent to commit fraud.
Sec. 1301.258. UNIFORM STANDARDS REQUIRED. An auditor must
conduct an on-site audit or a desk audit of similarly situated
pharmacists or pharmacies under the same audit standards.
Sec. 1301.259. ACCESS TO PREVIOUS AUDIT REPORTS. An
auditor may have access to audit reports of a pharmacist or
pharmacy that were prepared only for the insurer or pharmacy
benefit manager for which the auditor is conducting an audit.
Sec. 1301.260. COMPENSATION OF AUDITOR. An insurer,
pharmacy benefit manager, or other auditor may not base
compensation paid to the individual or entity performing an on-site
audit or a desk audit on a percentage of the amount the insurer,
pharmacy benefit manager, or other auditor is entitled to recover
as the result of the audit.
Sec. 1301.261. CONCLUSION OF AUDIT; SUMMARY; PRELIMINARY
AUDIT REPORT. (a) At the conclusion of an on-site audit or a desk
audit, the auditor shall:
(1) provide to the pharmacist or pharmacy a summary of
the audit findings; and
(2) allow the pharmacist or pharmacy to respond to
questions and alleged discrepancies, if any, and comment on and
clarify the findings.
(b) Not later than the 30th day after the date the audit is
concluded, the auditor shall send by certified mail, return receipt
requested, to the pharmacist or pharmacy a preliminary audit report
stating the results of the audit, including explanations for and
the amount of recoupment claimed.
(c) The pharmacist or pharmacy may, by providing
documentation or otherwise, challenge a result or remedy a
discrepancy stated in the preliminary audit report not later than
the 30th day after the date the pharmacist or pharmacy receives the
report.
Sec. 1301.262. FINAL AUDIT REPORT. Not later than the 90th
day after the date the pharmacist or pharmacy receives a
preliminary audit report under Section 1301.261, the auditor shall
send by certified mail, return receipt requested, to the pharmacist
or pharmacy a final audit report that states:
(1) a summary of the pharmacist's or pharmacy's
explanation and documentation, if any, submitted in response to the
preliminary audit report; and
(2) the audit results, including a description of all
alleged discrepancies and explanations for and the amount of
recoupments claimed after consideration of the pharmacist's or
pharmacy's response to the preliminary audit report.
Sec. 1301.263. APPEAL OF FINAL AUDIT REPORT; AUDIT OUTCOME
REPORT. (a) An auditor shall establish a process for a pharmacist
or pharmacy to wholly or partly appeal a final audit report.
(b) An auditor shall use the National Council for
Prescription Drug Programs' data interchange standards for
pharmacy claim submission to evaluate audited claims and appeals
under the process established under Subsection (a).
(c) On the date a final audit report is found wholly or
partly unsubstantiated after an appeal under the process
established under Subsection (a), the auditor shall reject the
report, wholly or partly, as applicable.
(d) Not later than the 30th day after the date an appeal
under the process established under Subsection (a) is concluded,
the auditor shall send by certified mail, return receipt requested,
to the pharmacist or pharmacy an audit outcome report that
includes:
(1) a summary of the pharmacist's or pharmacy's
arguments and documentation, if any, submitted in response to the
final audit report; and
(2) the audit results and recoupments claimed after
consideration of the pharmacist's or pharmacy's response to the
final audit report.
Sec. 1301.264. RECOUPMENT AND INTEREST CHARGED AFTER AUDIT.
If an audit under this subchapter is conducted, the insurer or
pharmacy benefit manager:
(1) may recoup from the pharmacist or pharmacy an
amount based only on a final audit report or, if appealed under the
process established under Section 1301.263(a), an audit outcome
report; and
(2) may not accrue or assess interest on an amount due
until the later of the date the pharmacist or pharmacy receives the
final audit report or, if appealed under the process established
under Section 1301.263(a), the date of the audit outcome report.
Sec. 1301.265. MEDIATION. (a) A pharmacist or pharmacy
aggrieved by an audit outcome report may require an auditor to
participate in mediation under Chapter 154, Civil Practice and
Remedies Code.
(b) The pharmacist or pharmacy must elect mediation and
notify the auditor not later than the 30th day after the date the
pharmacist or pharmacy receives the audit outcome report. The
mediation must be completed not later than the 90th day after the
date the pharmacist or pharmacy receives the audit outcome report.
(c) The mediation must be conducted by a person qualified as
an impartial third party under Section 154.052, Civil Practice and
Remedies Code.
Sec. 1301.266. REMEDIES NOT EXCLUSIVE. This section may
not be construed to waive a remedy at law available to a pharmacist
or pharmacy.
Sec. 1301.267. WAIVER PROHIBITED. The provisions of this
subchapter may not be waived, voided, or nullified by contract.
Sec. 1301.268. LEGISLATIVE DECLARATION. It is the intent
of the legislature that the requirements contained in this
subchapter regarding audit of claims to preferred providers who are
pharmacists or pharmacies apply to all insurers and pharmacy
benefit managers unless otherwise prohibited by federal law.
SECTION 4. Section 1301.1041, Insurance Code, is
transferred to Subchapter F, Chapter 1301, Insurance Code, as added
by this Act, redesignated as Section 1301.252, Insurance Code, and
amended to read as follows:
Sec. 1301.252 [1301.1041]. AUDIT OF PHARMACIST OR
PHARMACY; NOTICE; GENERAL PROVISIONS. (a) An auditor [insurer or
a pharmacy benefit manager that administers pharmacy claims for the
insurer may not use extrapolation to complete the audit of a
preferred provider that is a pharmacist or pharmacy. An insurer
may not require extrapolation audits as a condition of
participation in the insurer's contract, network, or program for a
preferred provider that is a pharmacist or pharmacy.
[(b) An insurer or a pharmacy benefit manager that
administers pharmacy claims for the insurer] that performs an
on-site audit or a desk audit of a preferred provider who is a
pharmacist or pharmacy shall provide the provider reasonable notice
of the audit and accommodate the provider's schedule to the
greatest extent possible. The notice required under this
subsection must be in writing and must be sent by certified mail to
the preferred provider not later than the 15th day before the date
on which the on-site audit is scheduled to occur.
(b) Not later than the seventh day after the date a
pharmacist or pharmacy receives notice under Subsection (a), the
pharmacist or pharmacy may reschedule an on-site audit or a desk
audit to a date not later than the 14th day after the date the audit
is initially scheduled. On agreement of the pharmacist or pharmacy
and the auditor, the audit may be rescheduled to a date after the
14th day after the date the audit is initially scheduled.
(c) Unless the pharmacist or pharmacy consents in writing,
an auditor may not schedule or have an on-site audit or a desk audit
conducted:
(1) before the 30th day after the date the pharmacist
or pharmacy receives notice under Subsection (a);
(2) more than once annually; or
(3) during the first seven calendar days of a month.
(d) A pharmacist or pharmacy may be required to submit
documents in response to a desk audit not earlier than the 30th day
after the date the auditor requests the documents.
(e) A contract between a pharmacist or pharmacy and an
insurer or a pharmacy benefit manager must state detailed audit
procedures. If an insurer or pharmacy benefit manager proposes a
change to the audit procedures for an on-site audit or a desk audit,
the insurer or pharmacy benefit manager must notify the pharmacist
or pharmacy in writing of a change in an audit procedure not later
than the 60th day before the effective date of the change.
(f) The list of the claims subject to audit must be provided
in the notice under Subsection (a) to the pharmacist or pharmacy and
may identify the claims only by the prescription numbers or a date
range for prescriptions subject to the audit.
(g) If the auditor:
(1) in an on-site audit or a desk audit applies random
sampling procedures to select claims for audit, the sample size may
not be greater than 50 individual prescription claims; or
(2) conducts an on-site audit or a desk audit related
to a specific issue, the number of individual prescription claims
subject to the audit may not be greater than 50 and, notwithstanding
Subsection (f), may be identified only by prescription number.
(h) After an audit is initiated, a pharmacist or pharmacy
may electronically resubmit a disputed claim if the deadline for
submission of a claim under Section 1301.102 has not expired.
SECTION 5. The changes in law made by this Act apply only to
contracts between a pharmacist or pharmacy and a health maintenance
organization, an insurer, or a pharmacy benefit manager executed or
renewed, and audits conducted under those contracts, on or after
the effective date of this Act. A contract entered into or renewed,
and audits conducted under those contracts, before the effective
date of this Act are governed by the law in effect immediately
before the effective date of this Act, and that law is continued in
effect for that purpose.
SECTION 6. This Act takes effect September 1, 2013.