By: Hunter, et al. (Senate Sponsor - Van de Putte) H.B. No. 1358
(In the Senate - Received from the House May 3, 2013;
May 8, 2013, read first time and referred to Committee on State
Affairs; May 14, 2013, reported favorably by the following vote:
Yeas 8, Nays 0; May 14, 2013, sent to printer.)
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 1369, Insurance Code, is amended by
adding Subchapter F to read as follows:
SUBCHAPTER F. AUDITS OF PHARMACISTS AND PHARMACIES
Sec. 1369.251. DEFINITIONS. In this subchapter:
(1) "Desk audit" means an audit conducted by a health
benefit plan issuer or pharmacy benefit manager at a location other
than the location of the pharmacist or pharmacy. The term includes
an audit performed at the offices of the plan issuer or pharmacy
benefit manager during which the pharmacist or pharmacy provides
requested documents for review by hard copy or by microfiche, disk,
or other electronic media. The term does not include a review
conducted not later than the third business day after the date a
claim is adjudicated provided recoupment is not demanded.
(2) "Extrapolation" means a mathematical process or
technique used by a health benefit plan issuer or pharmacy benefit
manager that administers pharmacy claims for a health benefit plan
issuer in the audit of a pharmacy or pharmacist to estimate audit
results or findings for a larger batch or group of claims not
reviewed by the plan issuer or pharmacy benefit manager.
(3) "Health benefit plan" means a plan that provides
benefits for medical, surgical, or other treatment expenses
incurred as a result of a health condition, a mental health
condition, an accident, sickness, or substance abuse, including:
(A) an individual, group, blanket, or franchise
insurance policy or insurance agreement, a group hospital service
contract, or an individual or group evidence of coverage or similar
coverage document that is issued by:
(i) an insurance company;
(ii) a group hospital service corporation
operating under Chapter 842;
(iii) a health maintenance organization
operating under Chapter 843;
(iv) an approved nonprofit health
corporation that holds a certificate of authority under Chapter
844;
(v) a multiple employer welfare arrangement
that holds a certificate of authority under Chapter 846;
(vi) a stipulated premium company operating
under Chapter 884;
(vii) a fraternal benefit society operating
under Chapter 885;
(viii) a Lloyd's plan operating under
Chapter 941; or
(ix) an exchange operating under Chapter
942;
(B) a small employer health benefit plan written
under Chapter 1501; or
(C) a health benefit plan issued under Chapter
1551, 1575, 1579, or 1601.
(4) "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.
(5) "Pharmacy benefit manager" has the meaning
assigned by Section 4151.151.
Sec. 1369.252. EXCEPTIONS TO APPLICABILITY OF SUBCHAPTER.
This subchapter does not apply to an issuer or provider of health
benefits under or a pharmacy benefit manager administering pharmacy
benefits under:
(1) the state Medicaid program;
(2) the federal Medicare program;
(3) the state child health plan or health benefits
plan for children under Chapter 62 or 63, Health and Safety Code;
(4) the TRICARE military health system;
(5) a workers' compensation insurance policy or other
form of providing medical benefits under Title 5, Labor Code; or
(6) a self-funded health benefit plan as defined by
the Employee Retirement Income Security Act of 1974 (29 U.S.C.
Section 1001 et seq.).
Sec. 1369.253. CONFLICT WITH OTHER LAWS. If there is a
conflict between this subchapter and a provision of Chapter 843 or
1301 related to a pharmacy benefit manager, this subchapter
prevails.
Sec. 1369.254. AUDIT OF PHARMACIST OR PHARMACY; NOTICE;
GENERAL PROVISIONS. (a) Except as provided by Subsection (d), a
health benefit plan issuer or pharmacy benefit manager that
performs an on-site audit under this subchapter of a pharmacist or
pharmacy shall provide the pharmacist or pharmacy reasonable notice
of the audit and accommodate the pharmacist's or pharmacy's
schedule to the greatest extent possible. The notice required
under this subsection must be in writing and must be sent by a means
that allows tracking of delivery to the pharmacist or pharmacy not
later than the 14th 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 request that an on-site audit be
rescheduled to a mutually convenient date. The request must be
reasonably granted.
(c) Unless the pharmacist or pharmacy consents in writing, a
health benefit plan issuer or pharmacy benefit manager may not
schedule or have an on-site audit conducted:
(1) except as provided by Subsection (d), before the
14th day after the date the pharmacist or pharmacy receives notice
under Subsection (a), if applicable;
(2) more than twice annually in connection with a
particular payor; or
(3) during the first five calendar days of January and
December.
(d) A health benefit plan issuer or pharmacy benefit manager
is not required to provide notice before conducting an audit if,
after reviewing claims data, written or oral statements of pharmacy
staff, wholesalers, or others, or other investigative information,
including patient referrals, anonymous reports, or postings on
Internet websites, the plan issuer or pharmacy benefit manager
suspects the pharmacist or pharmacy subject to the audit committed
fraud or made an intentional misrepresentation related to the
pharmacy business. The pharmacist or pharmacy may not request that
the audit be rescheduled under Subsection (b).
(e) A pharmacist or pharmacy may be required to submit
documents in response to a desk audit not earlier than the 20th day
after the date the health benefit plan issuer or pharmacy benefit
manager requests the documents.
(f) A contract between a pharmacist or pharmacy and a health
benefit plan issuer or pharmacy benefit manager must state detailed
audit procedures. If a health benefit plan issuer or pharmacy
benefit manager proposes a change to the audit procedures for an
on-site audit or a desk audit, the plan issuer 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.
(g) The list of the claims subject to an on-site audit must
be provided in the notice under Subsection (a) to the pharmacist or
pharmacy and must identify the claims only by the prescription
numbers or a date range for prescriptions subject to the audit. The
last two digits of the prescription numbers provided may be
omitted.
(h) If the health benefit plan issuer or pharmacy benefit
manager 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 300 individual prescription claims.
Sec. 1369.255. COMPLETION OF AUDIT. An audit of a claim
under Section 1369.254 must be completed on or before the one-year
anniversary of the date the claim is received by the health benefit
plan issuer or pharmacy benefit manager.
Sec. 1369.256. AUDIT REQUIRING PROFESSIONAL JUDGMENT. A
health benefit plan issuer or pharmacy benefit manager that
conducts an on-site audit or a desk audit involving a pharmacist's
clinical or professional judgment must conduct the audit in
consultation with a licensed pharmacist.
Sec. 1369.257. ACCESS TO PHARMACY AREA. A health benefit
plan issuer or pharmacy benefit manager that conducts an on-site
audit may not enter the pharmacy area unless escorted by an
individual authorized by the pharmacist or pharmacy.
Sec. 1369.258. VALIDATION USING CERTAIN RECORDS
AUTHORIZED. A pharmacist or pharmacy that is being audited may:
(1) validate a prescription, refill of a prescription,
or change in a prescription with a prescription that complies with
applicable federal laws and regulations and state laws and 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. 1369.259. CALCULATION OF RECOUPMENT; USE OF
EXTRAPOLATION PROHIBITED. (a) A health benefit plan issuer or
pharmacy benefit manager may not calculate the amount of a
recoupment based on:
(1) an absence of documentation the pharmacist or
pharmacy is not required by applicable federal laws and regulations
and state laws and rules to maintain; or
(2) an error that does not result in actual financial
harm to the patient or enrollee, the health benefit plan issuer, or
the pharmacy benefit manager.
(b) A health benefit plan issuer 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) A health benefit plan issuer or pharmacy benefit manager
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) A health benefit plan issuer or pharmacy benefit manager
may not include a dispensing fee amount in the calculation of an
overpayment unless:
(1) the fee was a duplicate charge;
(2) the prescription for which the fee was charged:
(A) was not dispensed; or
(B) was dispensed:
(i) without the prescriber's authorization;
(ii) to the wrong patient; or
(iii) with the wrong instructions; or
(3) the wrong drug was dispensed.
Sec. 1369.260. CLERICAL OR RECORDKEEPING ERROR; FRAUD
ALLEGATION. (a) 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 or
intentional misrepresentation; and
(2) may not be the basis of a recoupment unless the
error results in actual financial harm to a patient or enrollee,
health benefit plan issuer, or pharmacy benefit manager.
(b) If the health benefit plan issuer or pharmacy benefit
manager alleges that the pharmacist or pharmacy committed fraud or
intentional misrepresentation described by Subsection (a), the
health benefit plan issuer or pharmacy benefit manager must state
the allegation in the final audit report required by Section
1369.264.
(c) After an audit is initiated, a pharmacist or pharmacy
may resubmit a claim described by Subsection (a) if the deadline for
submission of a claim under Section 843.337 or 1301.102 has not
expired.
Sec. 1369.261. ACCESS TO PREVIOUS AUDIT REPORTS; UNIFORM
AUDIT STANDARDS. (a) Except as provided by Subsection (b), a
health benefit plan issuer or pharmacy benefit manager may have
access to an audit report of a pharmacist or pharmacy only if the
report was prepared in connection with an audit conducted by the
health benefit plan issuer or pharmacy benefit manager.
(b) A health benefit plan issuer or pharmacy benefit manager
may have access to audit reports other than the reports described by
Subsection (a) if, after reviewing claims data, written or oral
statements of pharmacy staff, wholesalers, or others, or other
investigative information, including patient referrals, anonymous
reports, or postings on Internet websites, the plan issuer or the
pharmacy benefit manager suspects the audited pharmacist or
pharmacy committed fraud or made an intentional misrepresentation
related to the pharmacy business.
(c) An auditor must conduct an on-site audit or a desk audit
of similarly situated pharmacists or pharmacies under the same
audit standards.
Sec. 1369.262. COMPENSATION OF AUDITOR. An individual
performing an on-site audit or a desk audit may not directly or
indirectly receive compensation based on a percentage of the amount
recovered as a result of the audit.
Sec. 1369.263. CONCLUSION OF AUDIT; SUMMARY; PRELIMINARY
AUDIT REPORT. (a) At the conclusion of an on-site audit or a desk
audit, the health benefit plan issuer or pharmacy benefit manager
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 60th day after the date the audit is
concluded, the health benefit plan issuer or pharmacy benefit
manager shall send by a means that allows tracking of delivery to
the pharmacist or pharmacy a preliminary audit report stating the
results of the audit and a list identifying documentation, if any,
required to resolve discrepancies, if any, found as a result of the
audit.
(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.
(d) The pharmacist or pharmacy may request an extension to
provide documentation supporting a challenge. The request shall be
reasonably granted. A health benefit plan issuer or pharmacy
benefit manager that grants an extension is not subject to the
deadline to send the final audit report under Section 1369.264.
Sec. 1369.264. FINAL AUDIT REPORT. Not later than the 120th
day after the date the pharmacist or pharmacy receives a
preliminary audit report under Section 1369.263, the health benefit
plan issuer or pharmacy benefit manager shall send by a means that
allows tracking of delivery to the pharmacist or pharmacy a final
audit report that states:
(1) the audit results after review of the
documentation submitted by the pharmacist or pharmacy 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. 1369.265. CERTAIN AUDITS EXEMPT FROM DEADLINES. A
health benefit plan issuer or pharmacy benefit manager is not
subject to the deadlines for sending a report under Sections
1369.263 and 1369.264 if, after reviewing claims data, written or
oral statements of pharmacy staff, wholesalers, or others, or other
investigative information, including patient referrals, anonymous
reports, or postings on Internet websites, the plan issuer or
pharmacy benefit manager suspects the audited pharmacist or
pharmacy committed fraud or made an intentional misrepresentation
related to the pharmacy business.
Sec. 1369.266. RECOUPMENT AND INTEREST CHARGED AFTER AUDIT.
(a) If an audit under this subchapter is conducted, the health
benefit plan issuer or pharmacy benefit manager:
(1) may recoup from the pharmacist or pharmacy an
amount based only on a final audit report; and
(2) may not accrue or assess interest on an amount due
until the date the pharmacist or pharmacy receives the final audit
report under Section 1369.264.
(b) The limitations on recoupment and interest accrual or
assessment under Subsection (a) do not apply to a health benefit
plan issuer or pharmacy benefit manager that, after reviewing
claims data, written or oral statements of pharmacy staff,
wholesalers, or others, or other investigative information,
including patient referrals, anonymous reports, or postings on
Internet websites, suspects the audited pharmacist or pharmacy
committed fraud or made an intentional misrepresentation related to
the pharmacy business.
Sec. 1369.267. WAIVER PROHIBITED. The provisions of this
subchapter may not be waived, voided, or nullified by contract.
Sec. 1369.268. REMEDIES NOT EXCLUSIVE. This subchapter may
not be construed to waive a remedy at law available to a pharmacist
or pharmacy.
Sec. 1369.269. ENFORCEMENT; RULES. The commissioner may
enforce this subchapter and adopt and enforce reasonable rules
necessary to accomplish the purposes of this subchapter.
Sec. 1369.270. LEGISLATIVE DECLARATION. Except as provided
by Section 1369.252, it is the intent of the legislature that the
requirements contained in this subchapter regarding the audit of
claims to providers who are pharmacists or pharmacies apply to all
health benefit plan issuers and pharmacy benefit managers unless
otherwise prohibited by federal law.
SECTION 2. Section 1301.001, Insurance Code, as amended by
Chapters 288 (H.B. 1772) and 798 (H.B. 2292), Acts of the 82nd
Legislature, Regular Session, 2011, is amended by reenacting and
amending Subdivision (1) and reenacting Subdivision (1-a) to read
as follows:
(1) "Exclusive provider benefit plan" means a benefit
plan in which an insurer excludes benefits to an insured for some or
all services, other than emergency care services required under
Section 1301.155, provided by a physician or health care provider
who is not a preferred provider. ["Extrapolation" means a
mathematical process or technique used by an insurer or pharmacy
benefit manager that administers pharmacy claims for an insurer in
the audit of a pharmacy or pharmacist to estimate audit results or
findings for a larger batch or group of claims not reviewed by the
insurer or pharmacy benefit manager.]
(1-a) "Health care provider" means a practitioner,
institutional provider, or other person or organization that
furnishes health care services and that is licensed or otherwise
authorized to practice in this state. The term includes a
pharmacist and a pharmacy. The term does not include a physician.
SECTION 3. The following provisions of the Insurance Code
are repealed:
(1) Section 843.002(9-a);
(2) Section 843.3401; and
(3) Section 1301.1041.
SECTION 4. The changes in law made by this Act apply only to
contracts between a pharmacist or pharmacy and a health benefit
plan issuer or pharmacy benefit manager executed or renewed, and
audits conducted under those contracts, on or after the effective
date of this Act. Contracts 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 5. This Act takes effect September 1, 2013.
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