relating to health; establishing a pharmacy audit integrity program;
proposing coding for new law in Minnesota Statutes, chapter 151.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:

    Section 1. [151.60] PHARMACY AUDIT INTEGRITY PROGRAM.
The pharmacy audit integrity program is established to provide standards for an
audit of pharmacy records carried out by a pharmacy benefits manager or any entity that
represents pharmacy benefits managers.

    Sec. 2. [151.61] DEFINITIONS.
    Subdivision 1. Scope. For the purposes of sections 151.60 to 151.70, the following
terms have the meanings given.
    Subd. 2. Entity. "Entity" means a pharmacy benefits manager or any person or
organization that represents these companies, groups, or organizations.
    Subd. 3. Pharmacy benefits manager or PBM. "Pharmacy benefits manager"
or "PBM" means a person, business, or other entity that performs pharmacy benefits
management. The term includes a person or entity acting for a PBM in a contractual or
employment relationship in the performance of pharmacy benefits management.
    Subd. 4. Plan sponsor. "Plan sponsor" means the employer in the case of an
employee benefit plan established or maintained by a single employer, a group purchaser
as defined in section 62J.03, subdivision 6, or the employee organization in the case of a
plan established or maintained by an employee organization, an association, joint board
trustees, committee, or other similar group that establishes or maintains the plan.

    Sec. 3. [151.62] PHARMACY BENEFIT MANAGER CONTRACT.
An amendment to pharmacy audit terms in a contract between a PBM and a
pharmacy must be disclosed to the pharmacy at least 60 days prior to the effective date
of the proposed change.

    Sec. 4. [151.63] PROCEDURE AND PROCESS FOR CONDUCTING AND
REPORTING AN AUDIT.
    Subdivision 1. Audit procedures. Unless otherwise prohibited by federal
requirements or regulations, any entity conducting a pharmacy audit must follow the
following procedures.
(1) A pharmacy must be given notice 14 days before an initial on-site audit is
conducted.
(2) An audit that involves clinical or professional judgment must be conducted by or
in consultation with a licensed pharmacist.
(3) Each pharmacy shall be audited under the same standards and parameters as
other similarly situated pharmacies.
    Subd. 2. Audit process. Unless otherwise prohibited by federal requirements or
regulations, for any entity conducting a pharmacy audit the following audit items apply.
(1) The period covered by the audit may not exceed 24 months from the date that
the claim was submitted to or adjudicated by the entity, unless a longer period is required
under state or federal law.
(2) If an entity uses random sampling as a method for selecting a set of claims
for examination, the sample size must be appropriate for a statistically reliable sample.
Notwithstanding section 151.69, the auditing entity shall provide the pharmacy a masked
list that provides a prescription number or date range that the auditing entity is seeking
to audit.
(3) An on-site audit may not take place during the first five business days of the
month unless consented to by the pharmacy.
(4) Auditors may not enter the pharmacy area unless escorted where patient-specific
information is available and to the extent possible must be out of sight and hearing range
of the pharmacy customers.
(5) Any recoupment will not be deducted against future remittances until after the
appeals process and both parties have received the results of the final audit.
(6) A PBM may not require information to be written on a prescription unless
the information is required to be written on the prescription by state or federal law.
Recoupment may be assessed for items not written on the prescription if:
(i) additional information is required in the provider manual; or
(ii) the information is required by the Food and Drug Administration (FDA); or
(iii) the information is required by the drug manufacturer's product safety program;
and
(iv) the information in clauses (i), (ii), or (iii) is not readily available for the auditor
at the time of the audit.
(7) The auditing company or agent may not receive payment based on a percentage
of the amount recovered. This section does not prevent the entity conducting the audit
from charging or assessing the responsible party, directly or indirectly, based on amounts
recouped if both of the following conditions are met:
(i) the plan sponsor and the entity conducting the audit have a contract that explicitly
states the percentage charge or assessment to the plan sponsor; and
(ii) a commission to an agent or employee of the entity conducting the audit is not
based, directly or indirectly, on amounts recouped.

    Sec. 5. [151.64] REQUIREMENTS FOR RECOUPMENT OR CHARGEBACK.
For recoupment or chargeback, the following criteria apply.
(1) Audit parameters must consider consumer-oriented parameters based on
manufacturer listings.
(2) A pharmacy's usual and customary price for compounded medications is
considered the reimbursable cost unless the pricing methodology is outlined in the
provider contract.
(3) A finding of overpayment or underpayment must be based on the actual
overpayment or underpayment and not 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.
(4) The entity conducting the audit shall not use extrapolation in calculating the
recoupment or penalties for audits unless required by state or federal law or regulations.
(5) Calculations of overpayments must not include dispensing fees unless a
prescription was not actually dispensed; the prescriber denied authorization; the
prescription dispensed was a medication error by the pharmacy; or the identified
overpayment is solely based on an extra dispensing fee.
(6) An entity may not consider any clerical or record-keeping error, such as a
typographical error, scrivener's error, or computer error regarding a required document or
record as fraud, however such errors may be subject to recoupment.
(7) In the case of errors that have no actual financial harm to the patient or plan, the
PBM must not assess any chargebacks. Errors that are a result of the pharmacy failing to
comply with a formal corrective action plan may be subject to recovery.
(8) Interest may not accrue during the audit period for either party, beginning with
the notice of the audit and ending with the final audit report.

    Sec. 6. [151.65] DOCUMENTATION.
(a) To validate the pharmacy record and delivery, the pharmacy may use authentic
and verifiable statements or records including medication administration records of a
nursing home, assisted living facility, hospital, physician, or other authorized practitioner
or additional audit documentation parameters located in the provider manual.
(b) Any legal prescription that meets the requirements in this chapter may be used
to validate claims in connection with prescriptions, refills, or changes in prescriptions,
including medication administration records, faxes, e-prescriptions, or documented
telephone calls from the prescriber or the prescriber's agents.

    Sec. 7. [151.66] APPEALS PROCESS.
The entity conducting the audit must establish a written appeals process which must
include appeals of preliminary reports and final reports.

    Sec. 8. [151.67] AUDIT INFORMATION AND REPORTS.
(a) A preliminary audit report must be delivered to the pharmacy within 60 days
after the conclusion of the audit.
(b) A pharmacy must be allowed at least 45 days following receipt of the preliminary
audit to provide documentation to address any discrepancy found in the audit.
(c) A final audit report must be delivered to the pharmacy within 120 days after
receipt of the preliminary audit report or final appeal, whichever is later.
(d) An entity shall remit any money due to a pharmacy or pharmacist as a result of
an underpayment of a claim within 45 days after the appeals process has been exhausted
and the final audit report has been issued.

    Sec. 9. [151.68] DISCLOSURES TO PLAN SPONSOR.
Where contractually required, an auditing entity must provide a copy to the plan
sponsor of its claims that were included in the audit, and any recouped money shall be
returned to the plan sponsor.

    Sec. 10. [151.69] APPLICABILITY OF OTHER LAWS AND REGULATIONS.
Sections 151.62 to 151.67 do not apply to any investigative audit that involves
suspected fraud, willful misrepresentation, abuse, or any audit completed by Minnesota
health care programs.

    Sec. 11. [151.70] VIOLATIONS.
Violations of sections 151.62 to 151.68 may be grounds for action, but are not
deemed misdemeanors as described in section 151.29.