26-52-103. Pharmacy benefit manager audits.

(a) Any pharmacy benefit manager or person acting on behalf of a pharmacy benefit manager who conducts an audit of a pharmacy shall follow the following procedures:

(i) Provide written notice to the pharmacy not less than ten (10) business days before conducting any on-site, initial audit;

(ii) Conduct any audit requiring clinical or professional judgment through or in consultation with a licensed pharmacist;

(iii) Limit the period covered by the audit to not more than two (2) years from the date that an audited claim was adjudicated;

(iv) Allow verifiable statements or records, including medication administration records of a nursing home, assisted living facility, hospital, physician or other authorized practitioner, to validate the pharmacy record;

(v) Allow legal prescriptions, including medication administration records, faxes, electronic prescriptions or documented telephone calls from the prescriber or the prescriber's agent, to validate claims in connection with prescriptions, refills or changes in prescriptions;

(vi) Apply the same standards and parameters to each audited pharmacy as are applied to other similarly situated pharmacies in a pharmacy network contract in this state;

(vii) Not conduct any audit provided for in this section during the first seven (7) calendar days of any month without the consent of the audited pharmacy; and

(viii) Establish a written appeals process and provide a copy to every audited pharmacy.

(b) A pharmacy benefit manager or person acting on behalf of a pharmacy benefit manager who conducts an audit of a pharmacy also shall comply with the following requirements:

(i) Any finding of overpayment or underpayment shall be based on the actual overpayment or underpayment and not on 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;

(ii) Any finding of an overpayment shall not include the dispensing fee amount unless:

(A) A prescription was not received by the patient or the patient's designee;

(B) The prescriber denied authorization;

(C) The prescription dispensed was a medication error by the pharmacy; or

(D) The identified overpayment is based solely on an extra dispensing fee.

(iii) No audit shall use extrapolation in calculating the recoupments or penalties for audits, unless required by state or federal contracts;

(iv) No payment for the performance of an audit shall be based on a percentage of the amount recovered;

(v) Interest shall not accrue during the audit period;

(vi) No audit shall consider any clerical or recordkeeping error, such as a typographical error, scrivener's error or computer error regarding a required document or record, as fraud. These errors may be subject to recoupment. No recovery shall be assessed for errors causing no financial harm to the patient or plan. Errors that are the result of a pharmacy failing to comply with a formal corrective action plan may be subject to recovery. Any recoupment shall be based on the actual overpayment of a claim;

(vii) A preliminary audit report shall be delivered to the audited pharmacy within one hundred twenty (120) days after the conclusion of the audit;

(viii) A pharmacy shall be allowed at least thirty (30) days following receipt of the preliminary audit report to provide documentation addressing any audit finding, and a reasonable extension of time shall be granted upon request;

(ix) A final audit report shall be delivered to the pharmacy not more than one hundred twenty (120) days after the preliminary audit report is received by the pharmacy or submission of final internal appeal, whichever is later;

(x) Recoupment of any disputed funds or repayment of funds to the pharmacy benefit manager or insurer by the pharmacy, if permitted pursuant to contracts, shall occur, to the extent demonstrated or documented in the pharmacy audit findings, after final internal disposition of the audit including the appeals process. If the identified discrepancy for an individual audit exceeds fifteen thousand dollars ($15,000.00), any future payments to the pharmacy may be withheld pending finalization of the audit;

(xi) No chargebacks, recoupment or other penalties may be assessed until the appeal process has been exhausted and the final report issued.

(c) Subsections (a) and (b) of this section shall not apply to:

(i) Audits in which suspected fraudulent activity or other intentional or willful misrepresentation is evidenced by a physical review, review of claims data, statements or other investigative methods; or

(ii) Audits of claims paid for by federally funded programs.

(d) This section shall apply to a contracted pharmacy, or the pharmacy's designee who holds a contract with a pharmacy benefit manager, entered into, renewed or extended on or after July 1, 2016, and to all audits of pharmacies on and after July 1, 2017.