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H.B. 76 Enrolled





Chief Sponsor: Evan J. Vickers

Senate Sponsor: Stephen H. Urquhart

             6      Cosponsors:
             7      Rebecca Chavez-Houck
             8      Brad L. Dee
             9      Richard A. Greenwood
             10      Lynn N. Hemingway
             11      Don L. Ipson
Bradley G. LastDaniel McCay
Ronda Rudd Menlove
Merlynn T. Newbold
Michael E. Noel
Dixon M. Pitcher
Paul RayDean Sanpei
V. Lowry Snow
Christine F. Watkins
R. Curt Webb
Brad R. Wilson              12     
             13      LONG TITLE
             14      General Description:
             15          This bill requires health benefit plans, the Public Employees' Benefits and Insurance
             16      Program, and pharmacy benefit managers to implement certain pharmacy audit
             17      procedures when auditing pharmacy claims.
             18      Highlighted Provisions:
             19          This bill:
             20          .    requires a health insurer and a pharmacy benefits manager for a health insurer to
             21      comply with pharmacy audit rights established in the Pharmacy Practice Act;
             22          .    requires the Public Employees' Benefit and Insurance Program to comply with
             23      pharmacy audit rights established in the Pharmacy Practice Act;
             24          .    amends the definition of pharmacy benefits manager in the Pharmacy Practice Act
             25      to be consistent with the definition of pharmacy benefits manager in the Pharmacy
             26      Benefits Manager Act; and
             27          .    enacts pharmacy audit rights in the Pharmacy Practices Act that include:

             28              .    definitions;
             29              .    requirements for notice of an audit;
             30              .    limits on the types of claims that may be audited; and
             31              .    requirements for an entity conducting an audit.
             32      Money Appropriated in this Bill:
             33          None
             34      Other Special Clauses:
             35          None
             36      Utah Code Sections Affected:
             37      AMENDS:
             38          49-20-503, as enacted by Laws of Utah 2011, Chapter 83
             39          58-17b-102, as last amended by Laws of Utah 2010, Chapter 101
             40      ENACTS:
             41          31A-22-640, Utah Code Annotated 1953
             42          58-17b-622, Utah Code Annotated 1953
             44      Be it enacted by the Legislature of the state of Utah:
             45          Section 1. Section 31A-22-640 is enacted to read:
             46          31A-22-640. Insurer and pharmacy benefit management services -- Audit
             47      restrictions.
             48          (1) For purposes of this section "pharmacy benefits manager or coordinator" means a
             49      person or entity that provides pharmacy benefit management services as defined in Section
             50      49-20-502 on behalf of an insurer as defined in Subsection 31A-22-636 (1).
             51          (2) An insurer and an insurer's pharmacy benefits manager or coordinator is subject to
             52      the pharmacy audit provisions of Section 58-17b-622 .
             53          Section 2. Section 49-20-503 is amended to read:
             54           49-20-503. Request for proposals for pharmacy benefits manager for Public
             55      Employees' Benefit and Insurance Program.

             56          (1) When the board issues a request for proposals for a pharmacy benefits manager to
             57      provide pharmacy benefits management services for the program, the request for proposals
             58      shall:
             59          (a) require each responder to comply with the pharmacy audit provisions of Section
             60      58-17b-622 ; and
             61          (b) provide each responder with the option to include, among the billing options
             62      proposed, a billing option that complies with the requirements described in this section.
             63          (2) The billing option described in Subsection (1) shall require the pharmacy benefits
             64      manager to, on at least a monthly basis, submit to the board an invoice for all pharmacy
             65      services paid by the pharmacy benefits manager on behalf of the program since the last request
             66      for payment or reimbursement.
             67          (3) The invoice described in Subsection (2) shall state, as a separate item from any
             68      other amount:
             69          (a) the total amount due to the pharmacy benefits manager for all pharmacy services
             70      billed in the invoice; and
             71          (b) the total amount paid by the pharmacy benefits manager for the same pharmacy
             72      services for which payment is sought in that invoice.
             73          Section 3. Section 58-17b-102 is amended to read:
             74           58-17b-102. Definitions.
             75          In addition to the definitions in Section 58-1-102 , as used in this chapter:
             76          (1) "Administering" means:
             77          (a) the direct application of a prescription drug or device, whether by injection,
             78      inhalation, ingestion, or by any other means, to the body of a human patient or research subject
             79      by another person; or
             80          (b) the placement by a veterinarian with the owner or caretaker of an animal or group
             81      of animals of a prescription drug for the purpose of injection, inhalation, ingestion, or any other
             82      means directed to the body of the animal by the owner or caretaker in accordance with written
             83      or verbal directions of the veterinarian.

             84          (2) "Adulterated drug or device" means a drug or device considered adulterated under
             85      21 U.S.C.S. Sec. 351 (2003).
             86          (3) (a) "Analytical laboratory" means a facility in possession of prescription drugs for
             87      the purpose of analysis.
             88          (b) "Analytical laboratory" does not include a laboratory possessing prescription drugs
             89      used as standards and controls in performing drug monitoring or drug screening analysis if the
             90      prescription drugs are prediluted in a human or animal body fluid, human or animal body fluid
             91      components, organic solvents, or inorganic buffers at a concentration not exceeding one
             92      milligram per milliliter when labeled or otherwise designated as being for in vitro diagnostic
             93      use.
             94          (4) "Animal euthanasia agency" means an agency performing euthanasia on animals by
             95      the use of prescription drugs.
             96          (5) "Automated pharmacy systems" includes mechanical systems which perform
             97      operations or activities, other than compounding or administration, relative to the storage,
             98      packaging, dispensing, or distribution of medications, and which collect, control, and maintain
             99      all transaction information.
             100          (6) "Beyond use date" means the date determined by a pharmacist and placed on a
             101      prescription label at the time of dispensing that indicates to the patient or caregiver a time
             102      beyond which the contents of the prescription are not recommended to be used.
             103          [(8)] (7) "Board of pharmacy" or "board" means the Utah State Board of Pharmacy
             104      created in Section 58-17b-201 .
             105          [(7)] (8) "Branch pharmacy" means a pharmacy or other facility in a rural or medically
             106      underserved area, used for the storage and dispensing of prescription drugs, which is dependent
             107      upon, stocked by, and supervised by a pharmacist in another licensed pharmacy designated and
             108      approved by the division as the parent pharmacy.
             109          (9) "Centralized prescription processing" means the processing by a pharmacy of a
             110      request from another pharmacy to fill or refill a prescription drug order or to perform
             111      processing functions such as dispensing, drug utilization review, claims adjudication, refill

             112      authorizations, and therapeutic interventions.
             113          (10) "Class A pharmacy" means a pharmacy located in Utah that is authorized as a
             114      retail pharmacy to compound or dispense a drug or dispense a device to the public under a
             115      prescription order.
             116          (11) "Class B pharmacy":
             117          (a) means a pharmacy located in Utah:
             118          (i) that is authorized to provide pharmaceutical care for patients in an institutional
             119      setting; and
             120          (ii) whose primary purpose is to provide a physical environment for patients to obtain
             121      health care services; and
             122          (b) (i) includes closed-door, hospital, clinic, nuclear, and branch pharmacies; and
             123          (ii) pharmaceutical administration and sterile product preparation facilities.
             124          (12) "Class C pharmacy" means a pharmacy located in Utah that is authorized to
             125      engage in the manufacture, production, wholesale, or distribution of drugs or devices.
             126          (13) "Class D pharmacy" means a nonresident pharmacy.
             127          (14) "Class E pharmacy" means all other pharmacies.
             128          (15) "Closed-door pharmacy" means a pharmacy that provides pharmaceutical care to a
             129      defined and exclusive group of patients who have access to the services of the pharmacy
             130      because they are treated by or have an affiliation with a specific entity, including a health
             131      maintenance organization or an infusion company, but not including a hospital pharmacy, a
             132      retailer of goods to the general public, or the office of a practitioner.
             133          (16) "Collaborative pharmacy practice" means a practice of pharmacy whereby one or
             134      more pharmacists have jointly agreed, on a voluntary basis, to work in conjunction with one or
             135      more practitioners under protocol whereby the pharmacist may perform certain pharmaceutical
             136      care functions authorized by the practitioner or practitioners under certain specified conditions
             137      or limitations.
             138          (17) "Collaborative pharmacy practice agreement" means a written and signed
             139      agreement between one or more pharmacists and one or more practitioners that provides for

             140      collaborative pharmacy practice for the purpose of drug therapy management of patients and
             141      prevention of disease of human subjects.
             142          (18) (a) "Compounding" means the preparation, mixing, assembling, packaging, or
             143      labeling of a limited quantity drug, sterile product, or device:
             144          (i) as the result of a practitioner's prescription order or initiative based on the
             145      practitioner, patient, or pharmacist relationship in the course of professional practice;
             146          (ii) for the purpose of, or as an incident to, research, teaching, or chemical analysis and
             147      not for sale or dispensing; or
             148          (iii) in anticipation of prescription drug orders based on routine, regularly observed
             149      prescribing patterns.
             150          (b) "Compounding" does not include:
             151          (i) the preparation of prescription drugs by a pharmacist or pharmacy intern for sale to
             152      another pharmacist or pharmaceutical facility;
             153          (ii) the preparation by a pharmacist or pharmacy intern of any prescription drug in a
             154      dosage form which is regularly and commonly available from a manufacturer in quantities and
             155      strengths prescribed by a practitioner; or
             156          (iii) the preparation of a prescription drug, sterile product, or device which has been
             157      withdrawn from the market for safety reasons.
             158          (19) "Confidential information" has the same meaning as "protected health
             159      information" under the Standards for Privacy of Individually Identifiable Health Information,
             160      45 C.F.R. Parts 160 and 164.
             161          (20) "Controlled substance" has the same definition as in Section 58-37-2 .
             162          (21) "Dietary supplement" has the same meaning as Public Law Title 103, Chapter
             163      417, Sec. 3a(ff) which is incorporated by reference.
             164          (22) "Dispense" means the interpretation, evaluation, and implementation of a
             165      prescription drug order or device or nonprescription drug or device under a lawful order of a
             166      practitioner in a suitable container appropriately labeled for subsequent administration to or use
             167      by a patient, research subject, or an animal.

             168          (23) "Distribute" means to deliver a drug or device other than by administering or
             169      dispensing.
             170          (24) (a) "Drug" means:
             171          (i) a substance recognized in the official United States Pharmacopoeia, Official
             172      Homeopathic Pharmacopoeia of the United States, or Official National Formulary, or any
             173      supplement to any of them, intended for use in the diagnosis, cure, mitigation, treatment, or
             174      prevention of disease in humans or animals;
             175          (ii) a substance that is required by any applicable federal or state law or rule to be
             176      dispensed by prescription only or is restricted to administration by practitioners only;
             177          (iii) a substance other than food intended to affect the structure or any function of the
             178      body of humans or other animals; and
             179          (iv) substances intended for use as a component of any substance specified in
             180      Subsections (24)(a)(i), (ii), (iii), and (iv).
             181          (b) "Drug" does not include dietary supplements.
             182          (25) "Drug product equivalent" means a drug product that is designated as the
             183      therapeutic equivalent of another drug product in the Approved Drug Products with
             184      Therapeutic Equivalence Evaluations prepared by the Center for Drug Evaluation and Research
             185      of the Federal Food and Drug Administration.
             186          (26) "Drug regimen review" includes the following activities:
             187          (a) evaluation of the prescription drug order and patient record for:
             188          (i) known allergies;
             189          (ii) rational therapy-contraindications;
             190          (iii) reasonable dose and route of administration; and
             191          (iv) reasonable directions for use;
             192          (b) evaluation of the prescription drug order and patient record for duplication of
             193      therapy;
             194          (c) evaluation of the prescription drug order and patient record for the following
             195      interactions:

             196          (i) drug-drug;
             197          (ii) drug-food;
             198          (iii) drug-disease; and
             199          (iv) adverse drug reactions; and
             200          (d) evaluation of the prescription drug order and patient record for proper utilization,
             201      including over- or under-utilization, and optimum therapeutic outcomes.
             202          (27) "Drug sample" means a prescription drug packaged in small quantities consistent
             203      with limited dosage therapy of the particular drug, which is marked "sample", is not intended to
             204      be sold, and is intended to be provided to practitioners for the immediate needs of patients for
             205      trial purposes or to provide the drug to the patient until a prescription can be filled by the
             206      patient.
             207          (28) "Electronic signature" means a trusted, verifiable, and secure electronic sound,
             208      symbol, or process attached to or logically associated with a record and executed or adopted by
             209      a person with the intent to sign the record.
             210          (29) "Electronic transmission" means transmission of information in electronic form or
             211      the transmission of the exact visual image of a document by way of electronic equipment.
             212          (30) "Extern" means a college of pharmacy student enrolled in a college coordinated
             213      practical experience program in a health care setting under the supervision of a preceptor, as
             214      defined in this act, and approved by a college of pharmacy.
             215          (31) "Hospital pharmacy" means a pharmacy providing pharmaceutical care to
             216      inpatients of a general acute hospital or specialty hospital licensed by the Department of Health
             217      under Title 26, Chapter 21, Health Care Facility Licensing and Inspection Act.
             218          (32) "Legend drug" has the same meaning as prescription drug.
             219          (33) "Licensed pharmacy technician" means an individual licensed with the division,
             220      that may, under the supervision of a pharmacist, perform the activities involved in the
             221      technician practice of pharmacy.
             222          (34) "Manufacturer" means a person or business physically located in Utah licensed to
             223      be engaged in the manufacturing of drugs or devices.

             224          (35) (a) "Manufacturing" means:
             225          (i) the production, preparation, propagation, conversion, or processing of a drug or
             226      device, either directly or indirectly, by extraction from substances of natural origin or
             227      independently by means of chemical or biological synthesis, or by a combination of extraction
             228      and chemical synthesis, and includes any packaging or repackaging of the substance or labeling
             229      or relabeling of its container; and
             230          (ii) the promotion and marketing of such drugs or devices.
             231          (b) "Manufacturing" includes the preparation and promotion of commercially available
             232      products from bulk compounds for resale by pharmacies, practitioners, or other persons.
             233          (c) "Manufacturing" does not include the preparation or compounding of a drug by a
             234      pharmacist, pharmacy intern, or practitioner for that individual's own use or the preparation,
             235      compounding, packaging, labeling of a drug, or incident to research, teaching, or chemical
             236      analysis.
             237          (36) "Medical order" means a lawful order of a practitioner which may include a
             238      prescription drug order.
             239          (37) "Medication profile" or "profile" means a record system maintained as to drugs or
             240      devices prescribed for a pharmacy patient to enable a pharmacist or pharmacy intern to analyze
             241      the profile to provide pharmaceutical care.
             242          (38) "Misbranded drug or device" means a drug or device considered misbranded under
             243      21 U.S.C.S. Sec. 352 (2003).
             244          (39) (a) "Nonprescription drug" means a drug which:
             245          (i) may be sold without a prescription; and
             246          (ii) is labeled for use by the consumer in accordance with federal law.
             247          (b) "Nonprescription drug" includes homeopathic remedies.
             248          (40) "Nonresident pharmacy" means a pharmacy located outside of Utah that sells to a
             249      person in Utah.
             250          (41) "Nuclear pharmacy" means a pharmacy providing radio-pharmaceutical service.
             251          (42) "Out-of-state mail service pharmacy" means a pharmaceutical facility located

             252      outside the state that is licensed and in good standing in another state, that:
             253          (a) ships, mails, or delivers by any lawful means a dispensed legend drug to a patient in
             254      this state pursuant to a lawfully issued prescription;
             255          (b) provides information to a patient in this state on drugs or devices which may
             256      include, but is not limited to, advice relating to therapeutic values, potential hazards, and uses;
             257      or
             258          (c) counsels pharmacy patients residing in this state concerning adverse and therapeutic
             259      effects of drugs.
             260          (43) "Patient counseling" means the written and oral communication by the pharmacist
             261      or pharmacy intern of information, to the patient or caregiver, in order to ensure proper use of
             262      drugs, devices, and dietary supplements.
             263          (44) "Pharmaceutical administration facility" means a facility, agency, or institution in
             264      which:
             265          (a) prescription drugs or devices are held, stored, or are otherwise under the control of
             266      the facility or agency for administration to patients of that facility or agency;
             267          (b) prescription drugs are dispensed to the facility or agency by a licensed pharmacist
             268      or pharmacy intern with whom the facility has established a prescription drug supervising
             269      relationship under which the pharmacist or pharmacy intern provides counseling to the facility
             270      or agency staff as required, and oversees drug control, accounting, and destruction; and
             271          (c) prescription drugs are professionally administered in accordance with the order of a
             272      practitioner by an employee or agent of the facility or agency.
             273          (45) (a) "Pharmaceutical care" means carrying out the following in collaboration with a
             274      prescribing practitioner, and in accordance with division rule:
             275          (i) designing, implementing, and monitoring a therapeutic drug plan intended to
             276      achieve favorable outcomes related to a specific patient for the purpose of curing or preventing
             277      the patient's disease;
             278          (ii) eliminating or reducing a patient's symptoms; or
             279          (iii) arresting or slowing a disease process.

             280          (b) "Pharmaceutical care" does not include prescribing of drugs without consent of a
             281      prescribing practitioner.
             282          (46) "Pharmaceutical facility" means a business engaged in the dispensing, delivering,
             283      distributing, manufacturing, or wholesaling of prescription drugs or devices within or into this
             284      state.
             285          (47) (a) "Pharmaceutical wholesaler or distributor" means a pharmaceutical facility
             286      engaged in the business of wholesale vending or selling of any prescription drug or device to
             287      other than the consumer or user of the prescription drug or device, which the pharmaceutical
             288      facility has not produced, manufactured, compounded, or dispensed.
             289          (b) "Pharmaceutical wholesaler or distributor" does not include a pharmaceutical
             290      facility carrying out the following business activities:
             291          (i) intracompany sales;
             292          (ii) the sale, purchase, or trade of a prescription drug or device, or offer to sell,
             293      purchase or trade a prescription drug or device between hospitals or other health care facilities
             294      that are under common ownership or control of the management and operation of the facilities;
             295          (iii) the sale, purchase, or trade of a prescription drug or device, or offer to sell,
             296      purchase, or trade a prescription drug or device for emergency medical reasons, or to supply
             297      another pharmaceutical facility to alleviate a temporary shortage; or
             298          (iv) the distribution of a prescription drug or device as a sample by representatives of a
             299      manufacturer.
             300          (48) "Pharmacist" means an individual licensed by this state to engage in the practice
             301      of pharmacy.
             302          (49) "Pharmacist-in-charge" means a pharmacist currently licensed in good standing
             303      who accepts responsibility for the operation of a pharmacy in conformance with all laws and
             304      rules pertinent to the practice of pharmacy and the distribution of drugs, and who is personally
             305      in full and actual charge of the pharmacy and all personnel.
             306          (50) "Pharmacist preceptor" means a licensed pharmacist in good standing with two or
             307      more years of licensed experience. The preceptor serves as a teacher, example of professional

             308      conduct, and supervisor of interns in the professional practice of pharmacy.
             309          (51) "Pharmacy" means any place where:
             310          (a) drugs are dispensed;
             311          (b) pharmaceutical care is provided;
             312          (c) drugs are processed or handled for eventual use by a patient; or
             313          (d) drugs are used for the purpose of analysis or research.
             314          (52) "Pharmacy benefits manager or coordinator" means a person or entity that
             315      [administers the prescription drug or device portion of a health insurance plan] provides
             316      pharmacy benefit management services as defined in Section 49-20-502 on behalf of a
             317      self-insured employer, insurance company, health maintenance organization, or other plan
             318      sponsor, as defined by rule.
             319          (53) "Pharmacy intern" means an individual licensed by this state to engage in practice
             320      as a pharmacy intern.
             321          (54) "Pharmacy technician training program" means an approved technician training
             322      program providing education for pharmacy technicians.
             323          (55) (a) "Practice as a licensed pharmacy technician" means engaging in practice as a
             324      pharmacy technician under the general supervision of a licensed pharmacist and in accordance
             325      with a scope of practice defined by division rule made in collaboration with the board.
             326          (b) "Practice as a licensed pharmacy technician" does not include:
             327          (i) performing a drug utilization review, prescription drug order clarification from a
             328      prescriber, final review of the prescription and prescribed drug prepared for dispensing,
             329      dispensing of the drug, or counseling a patient with respect to a prescription drug;
             330          (ii) counseling regarding nonprescription drugs and dietary supplements unless
             331      delegated by the supervising pharmacist; or
             332          (iii) receiving new prescription drug orders when communicating telephonically or
             333      electronically unless the original information is recorded so the pharmacist may review the
             334      prescription drug order as transmitted.
             335          (56) "Practice of pharmacy" includes the following:

             336          (a) providing pharmaceutical care;
             337          (b) collaborative pharmacy practice in accordance with a collaborative pharmacy
             338      practice agreement;
             339          (c) compounding, packaging, labeling, dispensing, administering, and the coincident
             340      distribution of prescription drugs or devices, provided that the administration of a prescription
             341      drug or device is:
             342          (i) pursuant to a lawful order of a practitioner when one is required by law; and
             343          (ii) in accordance with written guidelines or protocols:
             344          (A) established by the licensed facility in which the prescription drug or device is to be
             345      administered on an inpatient basis; or
             346          (B) approved by the division, in collaboration with the board and the Physicians
             347      Licensing Board, created in Section 58-67-201 , if the prescription drug or device is to be
             348      administered on an outpatient basis solely by a licensed pharmacist;
             349          (d) participating in drug utilization review;
             350          (e) ensuring proper and safe storage of drugs and devices;
             351          (f) maintaining records of drugs and devices in accordance with state and federal law
             352      and the standards and ethics of the profession;
             353          (g) providing information on drugs or devices, which may include advice relating to
             354      therapeutic values, potential hazards, and uses;
             355          (h) providing drug product equivalents;
             356          (i) supervising pharmacist's supportive personnel, pharmacy interns, and pharmacy
             357      technicians;
             358          (j) providing patient counseling, including adverse and therapeutic effects of drugs;
             359          (k) providing emergency refills as defined by rule;
             360          (l) telepharmacy; and
             361          (m) formulary management intervention.
             362          (57) "Practice of telepharmacy" means the practice of pharmacy through the use of
             363      telecommunications and information technologies.

             364          (58) "Practice of telepharmacy across state lines" means the practice of pharmacy
             365      through the use of telecommunications and information technologies that occurs when the
             366      patient is physically located within one jurisdiction and the pharmacist is located in another
             367      jurisdiction.
             368          (59) "Practitioner" means an individual currently licensed, registered, or otherwise
             369      authorized by the appropriate jurisdiction to prescribe and administer drugs in the course of
             370      professional practice.
             371          (60) "Prescribe" means to issue a prescription:
             372          (a) orally or in writing; or
             373          (b) by telephone, facsimile transmission, computer, or other electronic means of
             374      communication as defined by division rule.
             375          (61) "Prescription" means an order issued:
             376          (a) by a licensed practitioner in the course of that practitioner's professional practice or
             377      by collaborative pharmacy practice agreement; and
             378          (b) for a controlled substance or other prescription drug or device for use by a patient
             379      or an animal.
             380          (62) "Prescription device" means an instrument, apparatus, implement, machine,
             381      contrivance, implant, in vitro reagent, or other similar or related article, and any component
             382      part or accessory, which is required under federal or state law to be prescribed by a practitioner
             383      and dispensed by or through a person or entity licensed under this chapter or exempt from
             384      licensure under this chapter.
             385          (63) "Prescription drug" means a drug that is required by federal or state law or rule to
             386      be dispensed only by prescription or is restricted to administration only by practitioners.
             387          (64) "Retail pharmacy" means a pharmaceutical facility dispensing prescription drugs
             388      and devices to the general public.
             389          (65) "Self-audit" means an internal evaluation of a pharmacy to determine compliance
             390      with this chapter.
             391          (66) "Supervising pharmacist" means a pharmacist who is overseeing the operation of

             392      the pharmacy during a given day or shift.
             393          (67) "Supportive personnel" means unlicensed individuals who:
             394          (a) may assist a pharmacist, pharmacist preceptor, pharmacy intern, or licensed
             395      pharmacy technician in nonjudgmental duties not included in the definition of the practice of
             396      pharmacy, practice of a pharmacy intern, or practice of a licensed pharmacy technician, and as
             397      those duties may be further defined by division rule adopted in collaboration with the board;
             398      and
             399          (b) are supervised by a pharmacist in accordance with rules adopted by the division in
             400      collaboration with the board.
             401          (68) "Unlawful conduct" is as defined in Sections 58-1-501 and 58-17b-501 .
             402          (69) "Unprofessional conduct" is as defined in Sections 58-1-501 and 58-17b-502 and
             403      may be further defined by rule.
             404          (70) "Veterinary pharmaceutical facility" means a pharmaceutical facility that
             405      dispenses drugs intended for use by animals or for sale to veterinarians for the administration
             406      for animals.
             407          Section 4. Section 58-17b-622 is enacted to read:
             408          58-17b-622. Pharmacy benefit management services -- Auditing of pharmacy
             409      records -- Appeals.
             410          (1) For purposes of this section:
             411          (a) "Audit" means a review of the records of a pharmacy by or on behalf of an entity
             412      that finances or reimburses the cost of health care services or pharmaceutical products.
             413          (b) "Entity" includes:
             414          (i) a pharmacy benefits manager or coordinator;
             415          (ii) a health benefit plan;
             416          (iii) a third party administrator as defined in Section 31A-1-301 ;
             417          (iv) a state agency; or
             418          (v) a company, group, or agent that represents, or is engaged by, one of the entities
             419      described in Subsections (1)(b)(i) through (iv).

             420          (c) "Fraud" means an intentional act of deception, misrepresentation, or concealment in
             421      order to gain something of value.
             422          (d) "Health benefit plan" means:
             423          (i) a health benefit plan as defined in Section 31A-1-301 ; or
             424          (ii) a health, dental, medical, Medicare supplement, or conversion program offered
             425      under Title 49, Chapter 20, Public Employees' Benefit and Insurance Program Act.
             426          (2) (a) Except as provided in Subsection (2)(b), this section applies to:
             427          (i) a contract for the audit of a pharmacy entered into, amended, or renewed on or after
             428      July 1, 2012; and
             429          (ii) an entity that conducts an audit of the pharmacy records of a pharmacy licensed
             430      under this chapter.
             431          (b) This section does not apply to an audit of pharmacy records:
             432          (i) for a federally funded prescription drug program, including:
             433          (A) the state Medicaid program;
             434          (B) the Medicare Part D program;
             435          (C) a Department of Defense prescription drug program;
             436          (D) a Veteran's Affairs prescription drug program; or
             437          (ii) when fraud or other intentional and willful misrepresentation is alleged and the
             438      pharmacy audit entity has evidence that the pharmacy's actions reasonably indicate fraud or
             439      intentional and willful misrepresentation.
             440          (3) (a) An audit that involves clinical or professional judgment shall be conducted by
             441      or in consultation with a licensed pharmacist who is employed by or working with the auditing
             442      entity.
             443          (b) If an audit is conducted on site at a pharmacy, the entity conducting the audit:
             444          (i) shall give the pharmacy 10 days advanced written notice of:
             445          (A) the audit; and
             446          (B) the range of prescription numbers or a date range included in the audit; and
             447          (ii) may not audit a pharmacy during the first five business days of the month, unless

             448      the pharmacy agrees to the timing of the audit.
             449          (c) An entity may not audit claims:
             450          (i) submitted more than 18 months prior to the audit, unless:
             451          (A) required by federal law; or
             452          (B) the originating prescription is dated in the preceding six months; or
             453          (ii) that exceed 200 selected prescription claims.
             454          (4) (a) An entity may not:
             455          (i) include dispensing fees in the calculations of overpayments unless the prescription
             456      is considered a misfill;
             457          (ii) recoup funds for prescription clerical or recordkeeping errors, including
             458      typographical errors, scrivener's errors, and computer errors on a required document or record
             459      unless the audit entity is alleging fraud or other intentional or willful misrepresentation and the
             460      audit entity has evidence that the pharmacy's actions reasonably indicate fraud or intentional
             461      and willful misrepresentation; or
             462          (iii) collect any funds, charge-backs, or penalties until the audit and all appeals are
             463      final, unless the audit entity is alleging fraud or other intentional or willful misrepresentation
             464      and the audit entity has evidence that the pharmacy's actions reasonably indicate fraud or
             465      intentional and willful misrepresentation.
             466          (b) Auditors shall only have access to previous audit reports on a particular pharmacy
             467      if the previous audit was conducted by the same entity except as required for compliance with
             468      state or federal law.
             469          (5) A pharmacy subject to an audit may use the following records to validate a claim
             470      for a prescription, refill, or change in a prescription:
             471          (a) electronic or physical copies of records of a health care facility, or a health care
             472      provider with prescribing authority; and
             473          (b) any prescription that complies with state law.
             474          (6) (a) An entity that audits a pharmacy shall provide the pharmacy with a preliminary
             475      audit report, delivered to the pharmacy or its corporate office of record within 60 days after

             476      completion of the audit.
             477          (b) A pharmacy has 30 days following receipt of the preliminary audit report to
             478      respond to questions, provide additional documentation, and comment on and clarify findings
             479      of the audit. Receipt of the report shall be based on the postmark date or the date of a
             480      computer transmission if transferred electronically.
             481          (7) If an audit results in the dispute or denial of a claim, the entity conducting the audit
             482      shall allow the pharmacy to resubmit a claim using any commercially reasonable method,
             483      including fax, mail, or electronic claims submission provided that the period of time when a
             484      claim may be resubmitted has not expired under the rules of the plan sponsor.
             485          (8) (a) Within 120 days after the completion of the appeals process under Subsection
             486      (9), a final audit report shall be delivered to the pharmacy or its corporate office of record.
             487          (b) The final audit report shall include a disclosure of any money recovered by the
             488      entity that conducted the audit.
             489          (9) An entity that audits a pharmacy shall establish a written appeals process for
             490      appealing a preliminary audit report and a final audit report, and shall provide the pharmacy
             491      with notice of the written appeals process. If the pharmacy benefit manager's contract or
             492      provider manual contains the information required by this Subsection (9), the requirement for
             493      notice is met.

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