Bill Text: MN HF1236 | 2011-2012 | 87th Legislature | Introduced
NOTE: There are more recent revisions of this legislation. Read Latest Draft
Bill Title: Pharmacy audit integrity program established.
Spectrum: Bipartisan Bill
Status: (Passed) 2012-04-24 - Secretary of State Chapter 215 04/23/12 [HF1236 Detail]
Download: Minnesota-2011-HF1236-Introduced.html
Bill Title: Pharmacy audit integrity program established.
Spectrum: Bipartisan Bill
Status: (Passed) 2012-04-24 - Secretary of State Chapter 215 04/23/12 [HF1236 Detail]
Download: Minnesota-2011-HF1236-Introduced.html
1.2relating to health; establishing a pharmacy audit integrity program;proposing
1.3coding for new law in Minnesota Statutes, chapter 151.
1.4BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:
1.5 Section 1. [151.60] PHARMACY AUDIT INTEGRITY PROGRAM.
1.6The pharmacy audit integrity program is established to provide standards for an
1.7audit of pharmacy records carried out by a managed care company, insurance company,
1.8Medicare Part B audit contractors, third-party payor, pharmacy benefits manager, health
1.9program administered by a state agency, or any entity that represents such companies.
1.10 Sec. 2. [151.61] DEFINITIONS.
1.11 Subdivision 1. Scope. For the purposes of sections 151.60 to 151.66, the following
1.12terms have the meanings given.
1.13 Subd. 2. Audit contractor. "Audit contractor" means a contractor that detects and
1.14corrects improper payments for an entity.
1.15 Subd. 3. Entity. "Entity" means a managed care company, an insurance company, a
1.16third-party payor, a pharmacy benefits manager, or any other organization that represents
1.17these companies, groups, or organizations.
1.18 Subd. 4. Insurance company. "Insurance company" means any corporation,
1.19association, benefit society, exchange, partnership, or individual engaged as principal in
1.20the business of insurance.
1.21 Subd. 5. Managed care company. "Managed care company" means the entity or
1.22organization that handles health care and financing.
2.1 Subd. 6. Pharmacy benefits manager or PBM. "Pharmacy benefits manager"
2.2or "PBM" means a person, business, or other entity that performs pharmacy benefits
2.3management. The term includes a person or entity acting for a PBM in a contractual or
2.4employment relationship in the performance of pharmacy benefits management for a
2.5managed care company, nonprofit hospital or medical service organization, insurance
2.6company, third-party payor of health program administered by a state agency.
2.7 Subd. 7. State agency health program. "State agency health program" means any
2.8program sponsored or administered by an agency of the state, except for Medicaid.
2.9 Subd. 8. Third-party payor. "Third-party payor" means an organization other than
2.10the patient or health care provider involved in the financing of personal health services.
2.11 Sec. 3. [151.62] PHARMACY BENEFIT MANAGER CONTRACT.
2.12(a) A pharmacy benefit manager (PBM) contract that is altered or amended by that
2.13entity may be substituted for a current contract but is not effective without the written
2.14consent of a pharmacy. The pharmacy must receive a copy of the proposed contract
2.15changes or renewal along with a disclosure by the PBM of all material changes in terms of
2.16the contract or methods of reimbursement from the previous contract.
2.17(b) An amendment or change in terms of an existing contract between a PBM and a
2.18pharmacy must be disclosed to the pharmacy at least 120 days prior to the effective date
2.19of the proposed change. A PBM may not alter or amend a PBM contract, or impose
2.20any additional contractual obligation on a pharmacy, unless the PBM complies with the
2.21requirements in this section.
2.22 Sec. 4. [151.63] PROCEDURES FOR CONDUCTING AND REPORTING AN
2.23AUDIT.
2.24(a) Any entity conducting a pharmacy audit must follow the following procedures:
2.25(1) a pharmacy must be given a written notice at least 14 business days before an
2.26initial on-site audit is conducted;
2.27(2) an audit that involves clinical or professional judgment must be conducted by or
2.28in consultation with a pharmacist licensed in this state or the Board of Pharmacy;
2.29(3) the period covered by the audit may not exceed 18 months from the date that the
2.30claim was submitted to or adjudicated by the entity, unless a longer period is permitted
2.31under federal law;
2.32(4) the PBM may not audit more than 40 prescriptions per audit;
3.1(5) the audit may not take place during the first seven business days of the month
3.2due to the high volume of prescriptions filled during that time unless consented to by
3.3the pharmacy;
3.4(6) the pharmacy may use the records of a hospital, physician, or other authorized
3.5practitioner to validate the pharmacy record and delivery and includes a medication
3.6administration record;
3.7(7) any legal prescription which meets the requirements in this chapter may be used
3.8to validate claims in connection with prescriptions, refills, or changes in prescriptions,
3.9including medication administration records, faxes, e-prescriptions, or documented
3.10telephone calls from the prescriber or their agents;
3.11(8) audit parameters must use consumer-oriented parameters based on manufacturer
3.12listings or recommendations as follows:
3.13(i) day supply for eye drops, so that the consumer pays only one 30-day co-payment
3.14when the bottle of eye drops is intended by the manufacturer to be a 30-day supply;
3.15(ii) when calculating the day supply for insulin, the highest dose prescribed must be
3.16used to determine the day supply and patient co-payments; and
3.17(iii) when calculating the day supply for topical products, the pharmacist's judgment
3.18shall take precedence;
3.19(9) a pharmacy's usual and customary price for compounded medications is
3.20considered the reimbursable cost unless an alternate price is published in the provider
3.21contract and signed by both parties;
3.22(10) each pharmacy shall be audited under the same standards and parameters as
3.23other similarly situated pharmacies;
3.24(11) the commissioner of commerce shall address issues with questionable auditing
3.25practices;
3.26(12) the entity conducting the audit must establish a written appeals process which
3.27must include appeals of preliminary reports and final reports;
3.28(13) if either party is not satisfied with the appeal, that party may seek mediation; and
3.29(14) if copies of records are requested by the auditing entity, they will pay 25 cents
3.30per page to cover costs incurred to the pharmacy.
3.31(b) The entity conducting the audit shall also comply with the following
3.32requirements:
3.33(1) auditors may not enter the pharmacy area where patient-specific information is
3.34available and must be out of sight and hearing range of the pharmacy customers;
3.35(2) the pharmacy must provide an area for auditors to conduct their business;
4.1(3) a finding of overpayment or underpayment must be based on the actual
4.2overpayment or underpayment and not a projection based on the number of patients served
4.3having a similar diagnosis or on the number of similar orders or refills for similar drugs;
4.4(4) in the case of errors which have no financial harm to the patient or plan, the PBM
4.5must not assess any chargebacks;
4.6(5) calculations of overpayments must not include dispensing fees, unless a
4.7prescription was not actually dispensed or the prescriber denied authorization;
4.8(6) the entity conducting the audit shall not use extrapolation in calculating the
4.9recoupment or penalties for audits;
4.10(7) any recoupment will not be deducted against future remittances and shall be
4.11invoiced to the pharmacy for payment;
4.12(8) recoupment may not be assessed for items on the face of a prescription not
4.13required by the Minnesota Board of Pharmacy;
4.14(9) the auditing company or agent may not receive payment based on a percentage
4.15of the amount recovered;
4.16(10) interest may not accrue during the audit period, which begins with the notice of
4.17audit and ends with the final audit report;
4.18(11) an entity may not consider any clerical or record keeping error, such as a
4.19typographical error, scrivener's error, or computer error regarding a required document or
4.20record as fraud; however, such errors may be subject to recoupment;
4.21(12) a person shall not be subject to criminal penalties for errors provided for in
4.22clause (11) without proof of intent to commit fraud;
4.23(13) the commissioner of commerce may determine and assess a civil penalty for
4.24each violation of sections 151.60 to 151.64; and
4.25(14) the commissioner of commerce may require the entity to make restitution to
4.26any person who has suffered financial injury because of the violation.
4.27 Sec. 5. [151.64] AUDIT INFORMATION AND REPORTS.
4.28(a) A preliminary audit report must be delivered to the pharmacy within 30 days
4.29after the conclusion of the audit.
4.30(b) A pharmacy must be allowed at least 30 days following receipt of the preliminary
4.31audit to provide documentation to address any discrepancy found in the audit.
4.32(c) A final audit report must be delivered to the pharmacy within 90 days after
4.33receipt of the preliminary audit report or final appeal, whichever is later.
4.34(d) No chargeback, recoupment, or other penalties may be assessed until the appeals
4.35process has been exhausted and the final report issued.
5.1(e) An entity shall remit any money due to a pharmacy or pharmacist as a result of
5.2an underpayment of a claim within 30 days after the appeals process has been exhausted
5.3and the final audit report has been issued.
5.4(f) Where not superseded by state or federal law, audit information may not be
5.5shared. Auditors shall only have access to previous audit reports on a particular pharmacy
5.6conducted by that same auditing entity.
5.7 Sec. 6. [151.65] DISCLOSURES TO PLAN SPONSOR.
5.8An auditing entity must provide a copy of the final report to the plan sponsor whose
5.9claims were included in the audit, and the money shall be returned to the plan sponsor and
5.10the co-payment shall be returned directly to the patient.
5.11 Sec. 7. [151.66] APPLICABILITY OF OTHER LAWS AND REGULATIONS.
5.12(a) Sections 151.60 to 151.65 do not apply to any investigative audit that involves
5.13fraud, willful misrepresentation, or abuse, including without limitation:
5.14(1) insurance fraud;
5.15(2) billing for services not furnished or supplies not provided;
5.16(3) billing that appears to be a deliberate application for duplicate payment for the
5.17same services or supplies, billing both the beneficiary and the PBM or payor for the
5.18same service;
5.19(4) altering claim forms, electronic claim records, and medical documentation to
5.20obtain a higher payment amount;
5.21(5) soliciting, offering, or receiving a kickback or bribe;
5.22(6) participating in schemes that involve collusion between a provider and a
5.23beneficiary, or between a supplier and a provider, and result in higher costs or charges to
5.24the entity;
5.25(7) misrepresentations of dates and descriptions of services furnished or the identity
5.26of the beneficiary or the individual who furnished the services;
5.27(8) billing for prescriptions without a prescription on file, when over-the-counter
5.28items are dispensed;
5.29(9) dispensing prescriptions using outdated drugs;
5.30(10) billing with the wrong National Drug Code (NDC) or billing for a brand name
5.31when a generic drug is dispensed;
5.32(11) not crediting the payor for medications or parts of prescriptions that were not
5.33picked up within 14 days;
6.1(12) billing the payor a higher price than the pharmacy's usual and customary charge
6.2to the general public; and
6.3(13) billing for a product when there is no proof that the product was purchased.
6.4(b) All cases of suspected fraud or violations of law must be reported by the auditor
6.5to the Board of Pharmacy.
6.6 Sec. 8. EFFECTIVE DATE.
6.7Sections 1 to 7 apply to claims adjudicated on or after January 1, 2011.
1.3coding for new law in Minnesota Statutes, chapter 151.
1.4BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:
1.5 Section 1. [151.60] PHARMACY AUDIT INTEGRITY PROGRAM.
1.6The pharmacy audit integrity program is established to provide standards for an
1.7audit of pharmacy records carried out by a managed care company, insurance company,
1.8Medicare Part B audit contractors, third-party payor, pharmacy benefits manager, health
1.9program administered by a state agency, or any entity that represents such companies.
1.10 Sec. 2. [151.61] DEFINITIONS.
1.11 Subdivision 1. Scope. For the purposes of sections 151.60 to 151.66, the following
1.12terms have the meanings given.
1.13 Subd. 2. Audit contractor. "Audit contractor" means a contractor that detects and
1.14corrects improper payments for an entity.
1.15 Subd. 3. Entity. "Entity" means a managed care company, an insurance company, a
1.16third-party payor, a pharmacy benefits manager, or any other organization that represents
1.17these companies, groups, or organizations.
1.18 Subd. 4. Insurance company. "Insurance company" means any corporation,
1.19association, benefit society, exchange, partnership, or individual engaged as principal in
1.20the business of insurance.
1.21 Subd. 5. Managed care company. "Managed care company" means the entity or
1.22organization that handles health care and financing.
2.1 Subd. 6. Pharmacy benefits manager or PBM. "Pharmacy benefits manager"
2.2or "PBM" means a person, business, or other entity that performs pharmacy benefits
2.3management. The term includes a person or entity acting for a PBM in a contractual or
2.4employment relationship in the performance of pharmacy benefits management for a
2.5managed care company, nonprofit hospital or medical service organization, insurance
2.6company, third-party payor of health program administered by a state agency.
2.7 Subd. 7. State agency health program. "State agency health program" means any
2.8program sponsored or administered by an agency of the state, except for Medicaid.
2.9 Subd. 8. Third-party payor. "Third-party payor" means an organization other than
2.10the patient or health care provider involved in the financing of personal health services.
2.11 Sec. 3. [151.62] PHARMACY BENEFIT MANAGER CONTRACT.
2.12(a) A pharmacy benefit manager (PBM) contract that is altered or amended by that
2.13entity may be substituted for a current contract but is not effective without the written
2.14consent of a pharmacy. The pharmacy must receive a copy of the proposed contract
2.15changes or renewal along with a disclosure by the PBM of all material changes in terms of
2.16the contract or methods of reimbursement from the previous contract.
2.17(b) An amendment or change in terms of an existing contract between a PBM and a
2.18pharmacy must be disclosed to the pharmacy at least 120 days prior to the effective date
2.19of the proposed change. A PBM may not alter or amend a PBM contract, or impose
2.20any additional contractual obligation on a pharmacy, unless the PBM complies with the
2.21requirements in this section.
2.22 Sec. 4. [151.63] PROCEDURES FOR CONDUCTING AND REPORTING AN
2.23AUDIT.
2.24(a) Any entity conducting a pharmacy audit must follow the following procedures:
2.25(1) a pharmacy must be given a written notice at least 14 business days before an
2.26initial on-site audit is conducted;
2.27(2) an audit that involves clinical or professional judgment must be conducted by or
2.28in consultation with a pharmacist licensed in this state or the Board of Pharmacy;
2.29(3) the period covered by the audit may not exceed 18 months from the date that the
2.30claim was submitted to or adjudicated by the entity, unless a longer period is permitted
2.31under federal law;
2.32(4) the PBM may not audit more than 40 prescriptions per audit;
3.1(5) the audit may not take place during the first seven business days of the month
3.2due to the high volume of prescriptions filled during that time unless consented to by
3.3the pharmacy;
3.4(6) the pharmacy may use the records of a hospital, physician, or other authorized
3.5practitioner to validate the pharmacy record and delivery and includes a medication
3.6administration record;
3.7(7) any legal prescription which meets the requirements in this chapter may be used
3.8to validate claims in connection with prescriptions, refills, or changes in prescriptions,
3.9including medication administration records, faxes, e-prescriptions, or documented
3.10telephone calls from the prescriber or their agents;
3.11(8) audit parameters must use consumer-oriented parameters based on manufacturer
3.12listings or recommendations as follows:
3.13(i) day supply for eye drops, so that the consumer pays only one 30-day co-payment
3.14when the bottle of eye drops is intended by the manufacturer to be a 30-day supply;
3.15(ii) when calculating the day supply for insulin, the highest dose prescribed must be
3.16used to determine the day supply and patient co-payments; and
3.17(iii) when calculating the day supply for topical products, the pharmacist's judgment
3.18shall take precedence;
3.19(9) a pharmacy's usual and customary price for compounded medications is
3.20considered the reimbursable cost unless an alternate price is published in the provider
3.21contract and signed by both parties;
3.22(10) each pharmacy shall be audited under the same standards and parameters as
3.23other similarly situated pharmacies;
3.24(11) the commissioner of commerce shall address issues with questionable auditing
3.25practices;
3.26(12) the entity conducting the audit must establish a written appeals process which
3.27must include appeals of preliminary reports and final reports;
3.28(13) if either party is not satisfied with the appeal, that party may seek mediation; and
3.29(14) if copies of records are requested by the auditing entity, they will pay 25 cents
3.30per page to cover costs incurred to the pharmacy.
3.31(b) The entity conducting the audit shall also comply with the following
3.32requirements:
3.33(1) auditors may not enter the pharmacy area where patient-specific information is
3.34available and must be out of sight and hearing range of the pharmacy customers;
3.35(2) the pharmacy must provide an area for auditors to conduct their business;
4.1(3) a finding of overpayment or underpayment must be based on the actual
4.2overpayment or underpayment and not a projection based on the number of patients served
4.3having a similar diagnosis or on the number of similar orders or refills for similar drugs;
4.4(4) in the case of errors which have no financial harm to the patient or plan, the PBM
4.5must not assess any chargebacks;
4.6(5) calculations of overpayments must not include dispensing fees, unless a
4.7prescription was not actually dispensed or the prescriber denied authorization;
4.8(6) the entity conducting the audit shall not use extrapolation in calculating the
4.9recoupment or penalties for audits;
4.10(7) any recoupment will not be deducted against future remittances and shall be
4.11invoiced to the pharmacy for payment;
4.12(8) recoupment may not be assessed for items on the face of a prescription not
4.13required by the Minnesota Board of Pharmacy;
4.14(9) the auditing company or agent may not receive payment based on a percentage
4.15of the amount recovered;
4.16(10) interest may not accrue during the audit period, which begins with the notice of
4.17audit and ends with the final audit report;
4.18(11) an entity may not consider any clerical or record keeping error, such as a
4.19typographical error, scrivener's error, or computer error regarding a required document or
4.20record as fraud; however, such errors may be subject to recoupment;
4.21(12) a person shall not be subject to criminal penalties for errors provided for in
4.22clause (11) without proof of intent to commit fraud;
4.23(13) the commissioner of commerce may determine and assess a civil penalty for
4.24each violation of sections 151.60 to 151.64; and
4.25(14) the commissioner of commerce may require the entity to make restitution to
4.26any person who has suffered financial injury because of the violation.
4.27 Sec. 5. [151.64] AUDIT INFORMATION AND REPORTS.
4.28(a) A preliminary audit report must be delivered to the pharmacy within 30 days
4.29after the conclusion of the audit.
4.30(b) A pharmacy must be allowed at least 30 days following receipt of the preliminary
4.31audit to provide documentation to address any discrepancy found in the audit.
4.32(c) A final audit report must be delivered to the pharmacy within 90 days after
4.33receipt of the preliminary audit report or final appeal, whichever is later.
4.34(d) No chargeback, recoupment, or other penalties may be assessed until the appeals
4.35process has been exhausted and the final report issued.
5.1(e) An entity shall remit any money due to a pharmacy or pharmacist as a result of
5.2an underpayment of a claim within 30 days after the appeals process has been exhausted
5.3and the final audit report has been issued.
5.4(f) Where not superseded by state or federal law, audit information may not be
5.5shared. Auditors shall only have access to previous audit reports on a particular pharmacy
5.6conducted by that same auditing entity.
5.7 Sec. 6. [151.65] DISCLOSURES TO PLAN SPONSOR.
5.8An auditing entity must provide a copy of the final report to the plan sponsor whose
5.9claims were included in the audit, and the money shall be returned to the plan sponsor and
5.10the co-payment shall be returned directly to the patient.
5.11 Sec. 7. [151.66] APPLICABILITY OF OTHER LAWS AND REGULATIONS.
5.12(a) Sections 151.60 to 151.65 do not apply to any investigative audit that involves
5.13fraud, willful misrepresentation, or abuse, including without limitation:
5.14(1) insurance fraud;
5.15(2) billing for services not furnished or supplies not provided;
5.16(3) billing that appears to be a deliberate application for duplicate payment for the
5.17same services or supplies, billing both the beneficiary and the PBM or payor for the
5.18same service;
5.19(4) altering claim forms, electronic claim records, and medical documentation to
5.20obtain a higher payment amount;
5.21(5) soliciting, offering, or receiving a kickback or bribe;
5.22(6) participating in schemes that involve collusion between a provider and a
5.23beneficiary, or between a supplier and a provider, and result in higher costs or charges to
5.24the entity;
5.25(7) misrepresentations of dates and descriptions of services furnished or the identity
5.26of the beneficiary or the individual who furnished the services;
5.27(8) billing for prescriptions without a prescription on file, when over-the-counter
5.28items are dispensed;
5.29(9) dispensing prescriptions using outdated drugs;
5.30(10) billing with the wrong National Drug Code (NDC) or billing for a brand name
5.31when a generic drug is dispensed;
5.32(11) not crediting the payor for medications or parts of prescriptions that were not
5.33picked up within 14 days;
6.1(12) billing the payor a higher price than the pharmacy's usual and customary charge
6.2to the general public; and
6.3(13) billing for a product when there is no proof that the product was purchased.
6.4(b) All cases of suspected fraud or violations of law must be reported by the auditor
6.5to the Board of Pharmacy.
6.6 Sec. 8. EFFECTIVE DATE.
6.7Sections 1 to 7 apply to claims adjudicated on or after January 1, 2011.
