00                            HOUSE BILL NO. 259                                                                          
01 "An Act establishing procedures and guidelines for auditing pharmacy records; and                                       
02 providing for an effective date."                                                                                       
03 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF ALASKA:                                                                
04    * Section 1. The uncodified law of the State of Alaska is amended by adding a new section                          
05 to read:                                                                                                                
06       INTENT. This Act is intended to establish standards for an audit of pharmacy records                              
07 carried out by an insurer, a managed care company, a third-party payor, a pharmacy benefits                             
08 manager, a health plan administered by the state, or any entity that represents such companies.                         
09    * Sec. 2. AS 08.80 is amended by adding a new section to read:                                                     
10            Sec. 08.80.477. Pharmacy audits. (a) When an audit of the records of a                                   
11       pharmacy licensed in this state is conducted by an insurer, managed care company,                                 
12       hospital or medical service corporation, third-party payor, or pharmacy benefits                                  
13       manager,                                                                                                          
14                 (1)  for each audit cycle, the auditor shall provide the pharmacy or                                    

01       pharmacist with notice of the audit at least two weeks before conducting the initial on-                          
02       site audit;                                                                                                       
03                 (2)  unless the pharmacy and the auditor agree otherwise, the audit may                                 
04       not be scheduled to occur during the first seven business days of a month because of                              
05       the high volume of prescriptions that are filled during that time;                                                
06                 (3)  the audit of a claim shall occur within two years after the date the                               
07       claim was submitted;                                                                                              
08                 (4)  if the audit involves clinical or professional judgment, the audit                                 
09       must be conducted by or in consultation with a pharmacist licensed in the state;                                  
10                 (5)  each pharmacy shall be audited using the same standards and                                        
11       parameters as other similarly situated pharmacies;                                                                
12                 (6)  a clerical error, record-keeping error, typographical error, or                                    
13       scrivener's error may not constitute fraud;                                                                       
14                 (7)  an auditor conducting an audit may only have access to previous                                    
15       audit reports prepared by the auditor for the particular pharmacy being audited;                                  
16                 (8)  an auditor may only provide information to the person requesting                                   
17       the audit and the pharmacy being audited;                                                                         
18                 (9)  an auditor may not use the accounting practice of extrapolation to                                 
19       establish an overpayment or underpayment or for calculating recoupment or penalties;                              
20                 (10)  a finding of overpayment or underpayment by the auditor must be                                   
21       based on an actual overpayment or underpayment and may not be based on a                                          
22       projection based on the number of patients served who have a similar diagnosis or on                              
23       the number of similar orders or refills for similar drugs;                                                        
24                 (11)  calculations of overpayments may not include dispensing fees;                                     
25                 (12)  the preliminary audit report must be delivered to the pharmacy                                    
26       within 60 days after the completion of the audit;                                                                 
27                 (13)  a pharmacy shall be allowed at least 30 days following receipt of                                 
28       a preliminary audit report to produce documentation to address a discrepancy found                                
29       during the audit; a pharmacy may use any record, including the records of a hospital,                             
30       physician, or other health care provider, or other written or electronic record to                                
31       validate a pharmacy record;                                                                                       

01                 (14)  the insurer, managed care company, hospital or medical service                                    
02       corporation, third-party payor, or pharmacy benefits manager shall establish a written                            
03       appeal process by which a pharmacy may appeal an unfavorable preliminary or final                                 
04       audit report;                                                                                                     
05                 (15)  the final audit report must be delivered to the pharmacy within 90                                
06       days after receipt of the preliminary audit report or final appeal;                                               
07                 (16)  a chargeback, recoupment, or other penalty may not be assessed                                    
08       until the appeal process has been exhausted and the final report issued and may not                               
09       include charges for dispensing fees;                                                                              
10                 (17)  the auditor may not receive compensation based on the percentage                                  
11       of the amount recovered by the auditor;                                                                           
12                 (18)  interest may not accrue during the audit period;                                                  
13                 (19)  the auditor shall provide a copy of the final report to a health                                  
14       benefit plan sponsor affected by the audit.                                                                       
15            (b)  This section does not apply to a criminal investigation or to an                                        
16       investigation by a governmental agency.                                                                           
17            (c)  In this section, "health benefit plan" has the meaning given in                                         
18       AS 21.54.500.                                                                                                     
19    * Sec. 3. The uncodified law of the State of Alaska is amended by adding a new section to                          
20 read:                                                                                                                   
21       APPLICABILITY. This Act applies to pharmacy audits conducted after the effective                                  
22 date of this Act.                                                                                                       
23    * Sec. 4. This Act takes effect immediately under AS 01.10.070(c).