SB390 Alabama 2011 Session

Summary

Primary Sponsor

Tammy Irons

Democrat

Co-Sponsors

William “Bill” M. BeasleyRodger SmithermanQuinton RossPaul Bussman

Session

Regular Session 2011

Title

Pharmacies, records, audit, minimum and uniform standards established, procedures, appeals, Pharmacy Audit Integrity Act

Summary

SB390 would establish minimum, uniform standards for auditing pharmacy records, create a formal audit process and appeals, and ban extrapolation in recoupments.

What This Bill Does

It applies to audits conducted by health benefit plans, managed care companies, pharmacy benefit managers, third‑party payors, and related state programs or their representatives. Audits must follow procedures described in the contract, including at least two weeks' written notice and a documented audit checklist, with the auditor initialing each item. Audits should not disrupt pharmacy services; clinical judgments require pharmacist involvement, and clerical errors are not automatically treated as fraud. The act bans extrapolation for calculating recoupments and requires recoupments to reflect actual overpayments or underpayments, with some limitations.

Who It Affects

• Pharmacies in Alabama: must follow uniform audit standards, receive proper notice, participate with pharmacist input, and be protected from certain types of recoupment and undue delays.
• Auditing entities and health plans (including managed care organizations, PBMs, third‑party payors, health benefit plans, and related state programs): must follow the act's procedures, bear audit costs, provide reports, and offer an appeals process.

Key Provisions

• Establishes minimum and uniform standards for auditing pharmacy records by specified health plans and related entities.
• Requires audit contracts to describe procedures, include two weeks' written notice for audits, and provide a documented audit checklist.
• Audits must minimize disruption to patient care; clinical judgments require pharmacist involvement; clerical errors are not automatically fraud.
• Limits audit documentation requests to what state/federal law or Medicaid requires; restricts sharing of audit information across entities; auditors may only access prior reports by the same entity.
• Auditing entity bears the cost of audits; Alabama Medicaid is exempt from cost liability.
• Recoupments must be based on actual overpayments/underpayments; projections may be used for estimation, but final recoupment must reflect actual claims; overpayments may not include drug costs or dispensing fees unless not dispensed.
• Audit period may not exceed two years from claim submission or adjudication and may not exceed the claim resubmission window; audits cannot start in the first five days of a month without consent.
• Preliminary audit report due within 120 days; pharmacy has at least 30 days to respond; final report due within 180 days after preliminary or after final appeal; reports must be signed.
• If discrepancies exceed $25,000, future payments may be withheld pending final disposition.
• There is a written appeals process; unresolved issues may be mediated by a certified mediator; any extrapolation is prohibited.
• The act does not apply to audits involving fraud, willful misrepresentation, or abuse.
• The act becomes effective on the first day of the third month after passage and governor approval.

AI-generated summary using openai/gpt-5-nano on Feb 25, 2026. May contain errors — refer to the official bill text for accuracy.

Subjects

Pharmacies and Pharmacists