HB394 Alabama 2012 Session

Updated Feb 27, 2026

Notable

Summary

Primary Sponsor: Ron Johnson
Republican
Co-Sponsor: Elaine Beech
Session: Regular Session 2012
Title: Pharmacies, records, audit, minimum and uniform standards established, procedures, appeals, Pharmacy Audit Integrity Act
Summary: The Pharmacy Audit Integrity Act sets uniform standards for pharmacy audits, bans extrapolation in recoupments, and creates an appeals process.
What This Bill Does
It establishes minimum, uniform standards for auditing pharmacy records by health benefit plans, PBMs, and related entities in Alabama; it requires clear audit procedures, advance written notice, and steps to minimize disruption to pharmacies. It also prohibits using extrapolation to calculate recoupments, requires audits to be based on actual overpayments/underpayments, and limits lookback to two years. The act creates a defined appeals process and mediation option, and sets reporting timelines for audit results.

Who It Affects
Pharmacies and pharmacists in Alabama: must follow uniform audit standards, receive advance notice, provide documentation, and are protected from being charged with fraud for clerical errors if no harm occurred; have access to an appeals process.
Health benefit plans, managed care organizations, third-party payors, pharmacy benefit managers, and related entities: must conduct audits under uniform standards, provide documented audit procedures, cover reasonable audit costs, and disclose results; must not use extrapolation to determine recoupments.

Key Provisions
Establishes minimum and uniform standards for the audit of pharmacy records by or on behalf of certain entities.
Defines key terms (health benefit plan, pharmacy, pharmacy benefit manager) and who is subject to the act.
Requires clear audit procedures, including at least two weeks' written notice before on-site audits and documented itemization of audit guidelines.
Audits must minimize disruption to pharmacist duties; professional judgments for clinical aspects must involve a licensed pharmacist; clerical errors are not fraud, but may be recouped under certain conditions, with allowance for amended claims.
Prohibits extrapolation in calculating recoupments or penalties; recoupments must be based on actual overpayments/underpayments; lookback period limited to two years; audits may not be initiated during the first five days of a month or beyond contract termination six months.
Documentation demands limited to information required by state/federal law; auditors cannot inappropriately reuse audit data across plans and must sign audit reports; final reports provided to plans and pharmacies within specified timelines.
Provides a written appeals process, with potential mediation for unresolved issues; costs of mediation shared by the parties or per mediator's decision.
Effective date: becomes law on the first day of the third month after passage; act does not apply to audits involving fraud, willful misrepresentation, waste, or abuse.

AI-generated summary using openai/gpt-5-nano on Feb 24, 2026. May contain errors — refer to the official bill text for accuracy.
Subjects: Pharmacies and Pharmacists