Rhode Island SB 581: AN ACT RELATING TO BUSINESSES AND PROFESSIONS -- PHARMACIES (Establishes audit requirements for pharmacy benefit managers and also establishes annual reporting requirements for health insurers.)

Bill Text

2019 -- S 0581 SUBSTITUTE  A 
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LC002040/SUB  A 
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S T A T E      O F     R H O D E      I S L A N D 
IN GENERAL ASSEMBLY 
JANUARY SESSION, A.D. 2019 
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A   N       A   C  T 
RELATING TO BUSINESSES AND PROFESSIONS -- PHARMACIES 
Introduced By: Senators Lynch Prata, McCaffrey, and McKenney 
Date Introduced: March 14, 2019 
Referred To: Senate Health & Human Services 
 
 
It is enacted by the General Assembly as follows: 
SECTION 1.  Chapter  5-19.1  of  the  General  Laws  entitled "Pharmacies"  is  hereby 1 
amended by adding  thereto the following  section: 2 
5-19.1-34. Audits .     3 
(a) When  an  on-site  audit  of  the  records  of  a pharmacy is conducted by a carrier or their 4 
intermediary,  the audit  must be conducted in  accordance with the following  criteria: 5 
(1)  A  finding  of  overpayment  or  underpayment  must be based on the actual overpayment 6 
or  underpayment,  and  not  a  projection  based  on  the  number  of  patients  served  having  a  similar 7 
diagnosis,  or  on  the  number  of  similar  orders  or  refills  for  similar  drugs,  unless  the  projected 8 
overpayment or denial  is a part of a settlement agreed to by the pharmacy or pharmacist; 9 
(2)  The  auditor  may  not  use  extrapolation  in  calculating  recoupments  or  penalties  unless 10 
required  by state or federal laws or regulations; 11 
(3)  Any  audit  that  involves  clinical  judgment  must  be  conducted  by,  or  in  consultation 12 
with,  a pharmacist; and 13 
(4)  Each  entity  conducting  an  audit  shall  establish  an  appeal  process  under  which  a 14 
pharmacy may appeal an unfavorable preliminary  audit  report to the entity. 15 
(b)  This  section  does  not  apply  to  any  audit,  review,  or  investigation  that  is  initiated 16 
based on or involving  suspected or alleged fraud, willful  misrepresentation,  or abuse. 17 
(c)  Prior  to  an  audit,  the  entity  conducting  an  audit  shall  give  the pharmacy fourteen (14) 18 
days  advance  written  notice  of  the  audit  and  the  range  of  prescription  numbers  involved  in  the 19 

 
 
 
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audit.   The   carrier   or   their   intermediary   may  mask  the  last  two  digits  of  such  numbers. 1 
Additionally,  the  number  of  prescriptions  shall  not  exceed  one  hundred  fifty  (150)  prescription 2 
claims  and  their  applicable  refills.  The  time  allotted  must  be  adequate  to  collect  all  samples.  The 3 
examination  of signature  logs  shall  not exceed twenty-five (25) signature logs  in  number. 4 
(d) A pharmacy has the right to execute the dispute resolution contained  in  their  contract. 5 
(e)(1)  A  preliminary audit report must be delivered to the pharmacy or its corporate office 6 
within  sixty  (60)  days  after  the  conclusion  of  the  audit.  A  pharmacy  must  be  allowed  at  least 7 
thirty  (30)  days  following  receipt  of  the  preliminary  audit  to  provide  documentation  to  address 8 
any  discrepancy  found  in  the  audit.  A  final  audit  report  must  be  delivered  to  the  pharmacy  or  its 9 
corporate  office  within  ninety  (90)  days  after  receipt  of  the  preliminary  audit  report  or  final 10 
appeal,  whichever  is  later.  A  charge-back  recoupment  or  other  penalty may not be assessed until 11 
the  appeal  process  provided  by  the  pharmacy  benefits  manager  has  been  exhausted and the final 12 
report  issued.  If  the  identified  discrepancy  for  a  single audit exceeds twenty-five thousand dollars 13 
($25,000),  future  payments  in  excess  of  that  amount  may  be  withheld  pending  the adjudication of 14 
an  appeal.  Auditors  shall  only  have  access  to  previous  audit  reports  on  a  particular  pharmacy 15 
conducted for the same entity. 16 
(2)  Auditors  may  initiate  a  desk  audit  prior  to  an  on-site  audit  unless  otherwise  specified 17 
in  the law. 18 
(3) Contracted auditors cannot be paid based on the findings  within  an audit. 19 
(4)  Scanned  images  of  all  prescriptions  including  all  scheduled  controlled  substances  are 20 
allowed  to  be  used  by  the  pharmacist  for  an  audit.  Verbally  received  prescriptions  must  be 21 
accepted upon validation  by  the auditing  entity  and applicable  for the initial  desk or on-site audit. 22 
(5) The period covered by an audit may not  exceed two (2) years. 23 
(6)  Within  five  (5)  business  days  of  receiving  the  audit  notification,  pharmacies  are 24 
allowed,  at  a  minimum,  one  opportunity  to  reschedule  with  the  auditor  if  the  scheduled  audit 25 
presents a scheduling conflict  for the pharmacist. 26 
(f)  Any  clerical  error, typographical error, scrivener's error, or computer error regarding a 27 
document  or  record  required  under  the  Medicaid  program  does  not  constitute  a  willful  violation 28 
and is not  subject to criminal  penalties without  proof of i