03/13/2012 01:30 PM Senate LABOR & COMMERCE

                     SB 217-PHARMACY AUDITS                                                                                 
                                                                                                                                
1:36:22 PM                                                                                                                    
CHAIR  EGAN announced  consideration of  SB 217.  He invited  his                                                               
staff to explain the proposed committee substitute (CS).                                                                        
                                                                                                                                
1:37:21 PM                                                                                                                    
SENATOR MENARD joined the committee.                                                                                            
                                                                                                                                
DANA  OWEN,  staff to  Senator  Egan  and  the Senate  Labor  and                                                               
Commerce Committee, explained the CS  to SB 217(L&C), labeled 27-                                                               
LS1411\B. A number of grammatical  changes were made along with a                                                               
number of additions.  On page 1, line 8, in  section 1 "such" was                                                               
replaced by  "those" for clarification.  In section 2 on  page 2,                                                               
line 7,  new paragraph (3)  was added  that limits the  number of                                                               
prescriptions  an  auditor  may  audit  to  75.  They  have  been                                                               
informed that  standard audits run  somewhere between 25  and 125                                                               
prescriptions and can run many more than that.                                                                                  
                                                                                                                                
On page 2, line 18, the phrase  "may not be the basis for finding                                                               
fraud;"  replaces "may  not  constitute  fraud;" for  grammatical                                                               
clarity.                                                                                                                        
                                                                                                                                
On page 2, line 21,  "only provide information" was replaced with                                                               
"provide information only" to clarify the intent.                                                                               
                                                                                                                                
1:39:09 PM                                                                                                                    
On page  2, line  13, a  new paragraph (13)  was added  to ensure                                                               
that  a prescription  mailed or  delivered  at the  request of  a                                                               
patient may  not be  the basis  for a  charge back  recoupment or                                                               
penalty.  He said  that Southeast  Alaska has  actually had  some                                                               
experience with this; most of  the current contracts call for the                                                               
auditors  to  be  able  to  hold back  the  entire  amount  of  a                                                               
prescription if it  has been mail ordered and they  have a branch                                                               
of their business.                                                                                                              
                                                                                                                                
On page 3, line 7,  "documented telephone calls from a prescriber                                                               
or  prescriber's  agent" was  added  to  be  able to  validate  a                                                               
pharmacy record.                                                                                                                
                                                                                                                                
On page 3,  lines 25-27, subsection (b) was  rewritten to clarify                                                               
that this bill does not apply  to Medicaid audits. With that, Mr.                                                               
Owen offered to answer questions.                                                                                               
                                                                                                                                
1:40:40 PM                                                                                                                    
SENATOR MENARD asked  him to sum up the two  letters of objection                                                               
in their packet.                                                                                                                
                                                                                                                                
MR.  OWEN responded  that previous  testimony had  indicated that                                                               
audits are an  effective way to make sure fraud  and mistakes are                                                               
not made in the business  practices of dispensing drugs, and that                                                               
they are useful  for holding down costs. Some  people have argued                                                               
that the bill is unnecessary and  the audits are working well the                                                               
way  they  are,  but  the  committee  has  also  heard  testimony                                                               
otherwise.                                                                                                                      
                                                                                                                                
SENATOR  MENARD  said she  had  heard  that  overall one  of  the                                                               
objections is  that pharmacies  don't get  ample notice,  that it                                                               
goes from  one day to  the next and  then they want  an intensive                                                               
audit to happen.                                                                                                                
                                                                                                                                
SENATOR  GIESSEL moved  to  adopt  CSSB 217(  ),  version B,  for                                                               
discussion purposes.                                                                                                            
                                                                                                                                
CHAIR EGAN objected  for further discussion. He  found no further                                                               
comments.                                                                                                                       
                                                                                                                                
SENATOR  DAVIS  moved  to  report CSSB  217  (L&C),  version  27-                                                               
LS1411\B,  from  committee  with individual  recommendations  and                                                               
attached fiscal note(s).  There were no objections and  it was so                                                               
ordered.