SB 73

Under existing law, pharmacy benefit managers are neither authorized nor prohibited from preventing a pharmacy or pharmacist from disclosing information on the amount an individual would pay for a prescription drug if he or she does not have an insurance plan, benefits, discounts, or if the individual paid for the prescription without using their pharmacy benefits. This bill would prohibit pharmacy benefit managers from prohibiting pharmacies and pharmacists from providing this information

This bill would further provide auditing procedures for pharmacy records and would limit recoupment for certain errors by pharmacy

To prohibit pharmacy benefit managers from preventing pharmacies and pharmacists from disclosing information on the amount an individual would pay for a prescription drug if he or she does not have an insurance plan, benefits, discounts, or if an individual paid for a prescription without using their pharmacy benefits; to amend Sections 34-23-184 through 34-23-186, Code of Alabama 1975, to provide further for auditing procedures; and to limit recoupment for certain errors by a pharmacy.

Section 1

This Article shall be known and may be cited as The Pharmacy Patient Protection Act.

Section 2

For purposes of this act, the following words shall have the following meanings: (1) PHARMACIST. Any person licensed by the Alabama State Board of Pharmacy to practice the profession of pharmacy in the State of Alabama and whose license is in good standing. (2) PHARMACY. A place licensed by the Alabama State Board of Pharmacy in which prescriptions, drugs, medicines, medical devices, chemicals, and poisons are sold, offered for sale, compounded, or dispensed, and shall include all places whose title may imply the sale, offering for sale, compounding, or dispensing of prescriptions, drugs, medicines, chemicals, or poisons. (3) PHARMACY BENEFIT MANAGEMENT PLAN. An arrangement for the delivery of pharmacist services in which a pharmacy benefit manager undertakes to administer the payment or reimbursement of any of the costs of pharmacist services for an enrollee on a prepaid or insured basis that contains one or more incentive arrangements intended to influence the cost or level of pharmacist services between the plan sponsor and one or more pharmacies with respect to the delivery of pharmacist services and requires or creates benefit payment differential incentives for enrollees to use under the contract with the pharmacy benefit manager. (4) PHARMACY BENEFIT MANAGER. A business that administers the prescription drug or device portion of pharmacy benefit management plans or health insurance plans on behalf of plan sponsors, insurance companies, unions, and health maintenance organizations. The term includes a person or entity acting for a pharmacy benefit manager in a contractual or employment relationship in the performance of pharmacy benefits management for a managed care company, nonprofit hospital or medical service organization, insurance company, or third-party payor.

Section 3

(a) A pharmacy benefit manager shall not: (1) Prohibit a pharmacist or pharmacy from providing to an insured individual information on the amount of the insured person's cost share for their prescription drug and the clinical efficacy of a more affordable alternative drug if one is available. Neither a pharmacy or pharmacist can be penalized by a pharmacy benefits manager for disclosing this informality to an insured or for selling to an insured a more affordable alternative if one is available. (2) Prohibit a pharmacist or pharmacy from offering and providing store direct delivery services to an insured person as an ancillary service of the pharmacy. (3) Charge or collect from an insured person a co-payment that exceeds the total submitted charges by the network pharmacy for which the pharmacy is paid; (4) Charge or hold a pharmacist or pharmacy responsible for any fee that is related to the adjudication of a claim. (5) Recoup funds from a pharmacy in connection with claims for which the pharmacy has already been paid without first complying with the requirements set forth in Article of this Chapter, unless such recoupment is otherwise permitted or required by law; and (6) Penalize or retaliate against a pharmacist or pharmacy for exercising rights under this Article or Article 8. (b) To the extent any provision of this code section is inconsistent or conflicts with applicable federal law, rule, or regulation, such applicable federal law, rule, or regulation shall apply. (c) Each willful violation of the provisions of this article shall be punishable as provided in Section 27-1-12 pursuant to the powers of the Commissioner of the Department of Insurance as set forth in Section 27-2-7. In addition, any pharmacist or pharmacy may also enforce this article in the superior court of the county in this state where the pharmacist or pharmacy resides. (d ) This act shall be enforced by the Commissioner of Insurance who shall have oversight, including but not limited to, the authority to investigate complaints of alleged violations of the law, prohibit recoupments or adjudication fees, order reimbursement of any wrongful recoupments or imposed fees, institute fines for violations of the law, and promulgate rules and regulations to effectuate the provisions of this act.

Section 4

Sections 34-23-184 through 34-23-186, Code of Alabama 1975 are amended to read as follows:

§34-23-184.

(a) The entity conducting an audit shall follow these procedures:

(1) The pharmacy contract shall identify and describe in detail the audit procedures.

(2) The entity conducting the on-site audit shall give the pharmacy written notice at least two weeks before conducting the initial on-site audit for each audit cycle. If the pharmacy benefit manager does not include their auditing guidelines within their provider manual, then the notice must include a documented checklist of all items being audited and the manual, including the name, date, and edition or volume, applicable to the audit and auditing guidelines. For on-site audits a pharmacy benefit manager shall also provide a list of material that is copied or removed during the course of an audit to the pharmacy. The pharmacy benefit manager may document this material on either a checklist or on an audit acknowledgement form. The pharmacy shall produce any items during the course of the audit or within 30 days of the on-site audit.

(3) The entity conducting the on-site audit may not interfere with the delivery of pharmacist services to a patient and shall utilize every effort to minimize inconvenience and disruption to pharmacy operations during the audit process.

(4) An audit that involves clinical or professional judgment shall be conducted by or in consultation with a licensed pharmacist.

(5) The audit shall not consider as fraud any clerical or record keeping error, such as a typographical error, scrivener's error, or computer error regarding a required document or record; however, such errors may be subject to recoupment, provided that a pharmacy shall not be subject to a charge-back, or recoupment, penalty, fee, or assessment of any kind, for a clerical or recordkeeping error in a required document or record, including a typographical or computer error, unless the error resulted in overpayment to the pharmacy. The pharmacy shall have the right to submit amended claims through an online submission to correct clerical or recordkeeping errors in lieu of recoupment of a claim where no actual financial harm to the patient or plan has occurred, provided that the prescription was dispensed according to prescription documentation requirements set forth by the Alabama Pharmacy Act and within the plan limits. The pharmacy shall not be subject to recoupment of funds by the pharmacy benefit manager unless the pharmacy benefit manager can provide proof of intent to commit fraud or such error results in actual financial harm to the pharmacy benefit manager, a health insurance plan managed by the pharmacy benefit manager, or a consumer. A person shall not be subject to criminal penalties for errors provided for in this subsection without proof of intent to commit fraud, waste, or abuse.

a. Any amount to be charged back or recouped due to overpayment shall not exceed the amount the pharmacy was overpaid and a pharmacy shall not be subject to a penalty, fee, or assessment of any kind.

b. The auditing entity shall not include the dispensing fee in the calculation of an overpayment unless a prescription is considered a misfill. As used in this paragraph, misfill means a prescription that was not dispensed, a prescription in which the prescriber denied the authorization request, a prescription in which an additional dispensing fee was charged, or a prescription error.

(6) An entity conducting an audit shall not require any documentation that is not required by state and federal law. The information shall be considered to be valid if documented on the prescription, computerized treatment notes, pharmacy system, or other acceptable medical records.

(7) Unless superseded by state or federal law, auditors shall only have access to previous audit reports on a particular pharmacy conducted by the auditing entity for the same pharmacy benefit manager, health plan, or insurer. An auditing vendor contracting with multiple pharmacy benefit managers or health insurance plans shall not use audit reports or other information gained from an audit on a particular pharmacy to conduct another audit for a different pharmacy benefit manager or health insurance plan.

(8) Audit results shall be disclosed to the health benefit plan in a manner pursuant to contract terms.

(9) A pharmacy may use the records of a hospital, physician, or other authorized practitioner of the healing arts for drugs or medicinal supplies written or transmitted by any means of communication for the purposes of validating the pharmacy record with respect to orders or refills of a legend or narcotic drug.

(10) If the pharmacy benefit manager or its representative conducts an audit, the sample size shall not be greater than 150 prescriptions, provided that a refill does not constitute a separate prescription for the purposes of this subdivision. A prescription, including its refills, shall not be audited more than once a year.

(11) Reasonable costs associated with the audit shall be the responsibility of the auditing entity if the claims sample exceeds 100 unique prescription hard copies.

(12) A finding of an overpayment or an underpayment may be a projection based on the number of patients served having a similar diagnosis or on the number of similar orders or refills for similar drugs, except that recoupment shall be based on the actual overpayment or underpayment of actual claims.

(13) A finding of an overpayment may not include the cost of the drugs that were dispensed in accordance with the prescriber's orders, provided the prescription was dispensed according to prescription documentation requirements set forth by the Alabama Pharmacy Act and within the plan limits. A finding of an overpayment may not include the dispensing fee amount unless any of the following apply:

a. A prescription was not actually dispensed.

b. The prescriber denied authorization.

c. The prescription dispensed was a medication error by the pharmacy.

d. The identified overpayment is solely based on an extra dispensing fee.

(14) Each pharmacy shall be audited under the same standards and parameters as other similarly situated pharmacies audited by the entity and must be audited under rules applicable to the contractor and time period of the prescription.

(15) Where not superseded by state or federal law, the period covered by an audit may not exceed two years from the date the claim was submitted to or adjudicated by a managed care company, nonprofit hospital or medical service organization, health benefit plan, third-party payor, pharmacy benefit manager, a health program administered by a department of the state, or any entity that represents those companies, groups, or department. An audit may not be conducted six months past the date the pharmacy benefit management plan terminated its contract to adjudicate claims with a pharmacy benefit manager, health plan administrator, or any other entity representing those companies.

(16) An audit may not be initiated or scheduled during the first five calendar days of any month.

(b) The entity shall provide the pharmacy with a written report of the audit and comply with all of the following requirements:

(1) The preliminary audit report shall be delivered to the pharmacy within 90 days of (1) an onsite audit; or (2) the due date for documents to be submitted for a desk audit after the conclusion of the audit, with a reasonable extension to be granted upon request.

(2) A pharmacy shall be allowed at least 30 days following receipt of the preliminary audit report in which to produce documentation to address any discrepancy found during the audit, with a reasonable extension to be granted upon request.

(3) A final audit report shall be delivered to the pharmacy within 180 days after receipt of the preliminary audit report or final appeal, as provided for in Section 34-23-185, whichever is later.

(4) The audit documents shall be signed by the auditors assigned to the audit. The acknowledgement or receipt shall be signed by the auditor and the audit report shall contain clear contact information of the representative of the auditing organization.

(5) Recoupments of any disputed funds, or repayment of funds to the entity by the pharmacy if permitted pursuant to contractual agreement, shall occur after final internal disposition of the audit, including the appeals process and Commissioner of Insurance review as provided for in Section 34-23-185. If the identified discrepancy for an individual audit exceeds twenty-five thousand dollars ($25,000), future payments in excess of that amount to the pharmacy may be withheld pending finalization of the audit.

(6) Interest shall not accrue during the audit period.

(7) Each entity conducting an audit shall provide a copy of the final audit report, after completion of any review process, to the plan sponsor in a manner pursuant to a contract.

§34-23-185.

(a) Each entity conducting an audit shall establish a written appeals process under which a pharmacy may appeal an unfavorable preliminary audit report to the entity.

(b) Following the appeal, if the entity finds that an unfavorable audit report or any portion thereof is unsubstantiated, the entity shall dismiss the audit report or that portion without the necessity of any further action.

(c) Following the appeal, if any of the issues raised in the appeal are not resolved to the satisfaction of the pharmacy, the pharmacy may file a complaint with the Commissioner of Insurance who shall have oversight over Sections 34-23-183 through 34-23-185, Code of Alabama 1975, including but not limited to, the authority to investigate complaints of alleged violations of the law, prohibit recoupment, order reimbursement of any wrongful recoupments, institute fines for violations of the law, and promulgate rules and regulations to effectuate the provisions of this Title. either party, that party may ask for mediation of those unresolved issues unless other remedies are granted under the terms of the contract. A certified mediator shall be chosen by agreement of the parties from the mediators list maintained by the Alabama Supreme Court. The cost of mediation shall be borne by agreement of the parties or by the decision of the mediator.

§34-23-186.

(a) The auditing entity shall not use extrapolation or estimation to calculate penalties or amounts to be charged back or recouped unless otherwise required by federal requirements or federal plans.

(b) The auditing entity conducting a pharmacy audit shall not compensate an employee or contractor with which an auditing entity contracts to conduct a pharmacy audit based on the amount claimed or the actual amount recouped by the pharmacy being audited."

Section 5

This act shall become effective on the first day of the third month following its passage and approval by the Governor, or its otherwise becoming law.