00                      CS FOR SENATE BILL NO. 217(FIN)                                                                   
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)  an insurer, managed care company, hospital or medical service                                      
07       corporation, third-party payor, or pharmacy benefits manager may not conduct an                                   
08       audit within 90 days after an audit in which no errors were found; in this paragraph,                             
09       "error" does not mean a clerical error, record keeping error, or typographical error;                             
10                 (4)  the audit of a claim shall occur within two years after the date the                               
11       claim was submitted;                                                                                              
12                 (5)  if the audit involves clinical or professional judgment, the audit                                 
13       must be conducted by or in consultation with a pharmacist licensed in this or another                             
14       state;                                                                                                            
15                 (6)  each pharmacy shall be audited using the same standards and                                        
16       parameters as other similarly situated pharmacies;                                                                
17                 (7)  an auditor may not use the accounting practice of extrapolation to                                 
18       establish an overpayment or underpayment or for calculating recoupment or penalties;                              
19                 (8)  a finding of overpayment or underpayment by the auditor must be                                    
20       based on an actual overpayment or underpayment and may not be based on a                                          
21       projection based on the number of patients served who have a similar diagnosis or on                              
22       the number of similar orders or refills for similar drugs;                                                        
23                 (9)  calculations of overpayment by an auditor may not include                                          
24       dispensing fees unless a prescription was not dispensed, a physician denied                                       
25       authorization to dispense the prescription, or the dispensing violated a term of a                                
26       contract;                                                                                                         
27                 (10)  an auditor may not assess a charge-back, recoupment, or other                                     
28       penalty against a pharmacy solely because a prescription is mailed or delivered at the                            
29       request of a patient as part of a routine business practice of the pharmacy;                                      
30                 (11)  to the extent that an audit finds clerical or record keeping errors in                            
31       a required document or record, the pharmacy may not be subject to recoupment unless                               

01       the clerical or record keeping error results in actual financial harm to an insurer,                              
02       managed care company, hospital or medical services corporation, third-party payor,                                
03       pharmacy benefits manager, or a customer;                                                                         
04                 (12)  the preliminary audit report must be delivered to the pharmacy                                    
05       within 120 days after the completion of the audit;                                                                
06                 (13)  interest may not accrue from the date of completion of the audit to                               
07       the delivery date of the preliminary audit report, unless an auditor finds proof of intent                        
08       to commit fraud;                                                                                                  
09                 (14)  a pharmacy shall be allowed at least 30 days following receipt of                                 
10       a preliminary audit report to produce documentation to address a discrepancy found                                
11       during the audit; a pharmacy may use any record, including the records of a hospital,                             
12       physician, or other health care provider, or other written or electronic record to                                
13       validate a pharmacy record;                                                                                       
14                 (15)  the insurer, managed care company, hospital or medical service                                    
15       corporation, third-party payor, or pharmacy benefits manager shall establish a written                            
16       appeal process by which a pharmacy may appeal an unfavorable preliminary or final                                 
17       audit report;                                                                                                     
18                 (16)  the final audit report must be delivered to the pharmacy within 90                                
19       days after receipt of the preliminary audit report or final appeal;                                               
20                 (17)  the auditor may not receive compensation based on the percentage                                  
21       of the amount recovered by the auditor;                                                                           
22                 (18)  the auditor shall provide a copy of the final report to a health                                  
23       benefit plan sponsor affected by the audit;                                                                       
24                 (19)  patient information accessed in the course of an audit is                                         
25       confidential and may not be used for marketing purposes.                                                          
26            (b)  This section does not apply to                                                                          
27                 (1)  a criminal investigation; or                                                                       
28                 (2)  state Medicaid programs.                                                                           
29            (c)  In this section, "health benefit plan" has the meaning given in                                         
30       AS 21.54.500.                                                                                                     
31    * Sec. 3. The uncodified law of the State of Alaska is amended by adding a new section to                          

01 read:                                                                                                                   
02       APPLICABILITY. This Act applies to pharmacy audits conducted after the effective                                  
03 date of this Act.                                                                                                       
04    * Sec. 4. This Act takes effect January 1, 2013.