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First Substitute H.B. 76

Representative Evan J. Vickers proposes the following substitute bill:


             1     
PHARMACY AUDIT RIGHTS

             2     
2012 GENERAL SESSION

             3     
STATE OF UTAH

             4     
Chief Sponsor: Evan J. Vickers

             5     
Senate Sponsor: Stephen H. Urquhart

             6     
             7      LONG TITLE
             8      General Description:
             9          This bill requires health benefit plans, the Public Employees' Benefits and Insurance
             10      Program, and pharmacy benefit managers to implement certain pharmacy audit
             11      procedures when auditing pharmacy claims.
             12      Highlighted Provisions:
             13          This bill:
             14          .    requires a health insurer and a pharmacy benefits manager for a health insurer to
             15      comply with pharmacy audit rights established in the Pharmacy Practice Act;
             16          .    requires the Public Employees' Benefit and Insurance Program to comply with
             17      pharmacy audit rights established in the Pharmacy Practice Act;
             18          .    amends the definition of pharmacy benefits manager in the Pharmacy Practice Act
             19      to be consistent with the definition of pharmacy benefits manager in the Pharmacy
             20      Benefits Manager Act; and
             21          .    enacts pharmacy audit rights in the Pharmacy Practices Act that include:
             22              .    definitions;
             23              *    requirements for notice of an audit;
             24              .    limits on the types of claims that may be audited;
             25              *    requirements for an entity conducting an audit; and


             26              *    procedures to appeal an audit.
             27      Money Appropriated in this Bill:
             28          None
             29      Other Special Clauses:
             30          None
             31      Utah Code Sections Affected:
             32      AMENDS:
             33          49-20-503, as enacted by Laws of Utah 2011, Chapter 83
             34          58-17b-102, as last amended by Laws of Utah 2010, Chapter 101
             35      ENACTS:
             36          31A-22-640, Utah Code Annotated 1953
             37          58-17b-622, Utah Code Annotated 1953
             38     
             39      Be it enacted by the Legislature of the state of Utah:
             40          Section 1. Section 31A-22-640 is enacted to read:
             41          31A-22-640. Pharmacy benefit management services -- Audit restrictions.
             42          (1) For purposes of this section "pharmacy benefits manager or coordinator" means a
             43      person or entity that provides pharmacy benefit management services as defined in Section
             44      49-20-502 on behalf of an insurer as defined in Subsection 31A-22-636 (1).
             45          (2) An insurer and an insurer's pharmacy benefits manager or coordinator is subject to
             46      the pharmacy audit provisions of Section 58-17b-622 .
             47          Section 2. Section 49-20-503 is amended to read:
             48           49-20-503. Request for proposals for pharmacy benefits manager for Public
             49      Employees' Benefit and Insurance Program.
             50          (1) When the board issues a request for proposals for a pharmacy benefits manager to
             51      provide pharmacy benefits management services for the program, the request for proposals
             52      shall:
             53          (a) require each responder to comply with the pharmacy audit provisions of Section
             54      58-17b-622 ; and
             55          (b) provide each responder with the option to include, among the billing options
             56      proposed, a billing option that complies with the requirements described in this section.


             57          (2) The billing option described in Subsection (1) shall require the pharmacy benefits
             58      manager to, on at least a monthly basis, submit to the board an invoice for all pharmacy
             59      services paid by the pharmacy benefits manager on behalf of the program since the last request
             60      for payment or reimbursement.
             61          (3) The invoice described in Subsection (2) shall state, as a separate item from any
             62      other amount:
             63          (a) the total amount due to the pharmacy benefits manager for all pharmacy services
             64      billed in the invoice; and
             65          (b) the total amount paid by the pharmacy benefits manager for the same pharmacy
             66      services for which payment is sought in that invoice.
             67          Section 3. Section 58-17b-102 is amended to read:
             68           58-17b-102. Definitions.
             69          In addition to the definitions in Section 58-1-102 , as used in this chapter:
             70          (1) "Administering" means:
             71          (a) the direct application of a prescription drug or device, whether by injection,
             72      inhalation, ingestion, or by any other means, to the body of a human patient or research subject
             73      by another person; or
             74          (b) the placement by a veterinarian with the owner or caretaker of an animal or group
             75      of animals of a prescription drug for the purpose of injection, inhalation, ingestion, or any other
             76      means directed to the body of the animal by the owner or caretaker in accordance with written
             77      or verbal directions of the veterinarian.
             78          (2) "Adulterated drug or device" means a drug or device considered adulterated under
             79      21 U.S.C.S. Sec. 351 (2003).
             80          (3) (a) "Analytical laboratory" means a facility in possession of prescription drugs for
             81      the purpose of analysis.
             82          (b) "Analytical laboratory" does not include a laboratory possessing prescription drugs
             83      used as standards and controls in performing drug monitoring or drug screening analysis if the
             84      prescription drugs are prediluted in a human or animal body fluid, human or animal body fluid
             85      components, organic solvents, or inorganic buffers at a concentration not exceeding one
             86      milligram per milliliter when labeled or otherwise designated as being for in vitro diagnostic
             87      use.


             88          (4) "Animal euthanasia agency" means an agency performing euthanasia on animals by
             89      the use of prescription drugs.
             90          (5) "Automated pharmacy systems" includes mechanical systems which perform
             91      operations or activities, other than compounding or administration, relative to the storage,
             92      packaging, dispensing, or distribution of medications, and which collect, control, and maintain
             93      all transaction information.
             94          (6) "Beyond use date" means the date determined by a pharmacist and placed on a
             95      prescription label at the time of dispensing that indicates to the patient or caregiver a time
             96      beyond which the contents of the prescription are not recommended to be used.
             97          [(8)] (7) "Board of pharmacy" or "board" means the Utah State Board of Pharmacy
             98      created in Section 58-17b-201 .
             99          [(7)] (8) "Branch pharmacy" means a pharmacy or other facility in a rural or medically
             100      underserved area, used for the storage and dispensing of prescription drugs, which is dependent
             101      upon, stocked by, and supervised by a pharmacist in another licensed pharmacy designated and
             102      approved by the division as the parent pharmacy.
             103          (9) "Centralized prescription processing" means the processing by a pharmacy of a
             104      request from another pharmacy to fill or refill a prescription drug order or to perform
             105      processing functions such as dispensing, drug utilization review, claims adjudication, refill
             106      authorizations, and therapeutic interventions.
             107          (10) "Class A pharmacy" means a pharmacy located in Utah that is authorized as a
             108      retail pharmacy to compound or dispense a drug or dispense a device to the public under a
             109      prescription order.
             110          (11) "Class B pharmacy":
             111          (a) means a pharmacy located in Utah:
             112          (i) that is authorized to provide pharmaceutical care for patients in an institutional
             113      setting; and
             114          (ii) whose primary purpose is to provide a physical environment for patients to obtain
             115      health care services; and
             116          (b) (i) includes closed-door, hospital, clinic, nuclear, and branch pharmacies; and
             117          (ii) pharmaceutical administration and sterile product preparation facilities.
             118          (12) "Class C pharmacy" means a pharmacy located in Utah that is authorized to


             119      engage in the manufacture, production, wholesale, or distribution of drugs or devices.
             120          (13) "Class D pharmacy" means a nonresident pharmacy.
             121          (14) "Class E pharmacy" means all other pharmacies.
             122          (15) "Closed-door pharmacy" means a pharmacy that provides pharmaceutical care to a
             123      defined and exclusive group of patients who have access to the services of the pharmacy
             124      because they are treated by or have an affiliation with a specific entity, including a health
             125      maintenance organization or an infusion company, but not including a hospital pharmacy, a
             126      retailer of goods to the general public, or the office of a practitioner.
             127          (16) "Collaborative pharmacy practice" means a practice of pharmacy whereby one or
             128      more pharmacists have jointly agreed, on a voluntary basis, to work in conjunction with one or
             129      more practitioners under protocol whereby the pharmacist may perform certain pharmaceutical
             130      care functions authorized by the practitioner or practitioners under certain specified conditions
             131      or limitations.
             132          (17) "Collaborative pharmacy practice agreement" means a written and signed
             133      agreement between one or more pharmacists and one or more practitioners that provides for
             134      collaborative pharmacy practice for the purpose of drug therapy management of patients and
             135      prevention of disease of human subjects.
             136          (18) (a) "Compounding" means the preparation, mixing, assembling, packaging, or
             137      labeling of a limited quantity drug, sterile product, or device:
             138          (i) as the result of a practitioner's prescription order or initiative based on the
             139      practitioner, patient, or pharmacist relationship in the course of professional practice;
             140          (ii) for the purpose of, or as an incident to, research, teaching, or chemical analysis and
             141      not for sale or dispensing; or
             142          (iii) in anticipation of prescription drug orders based on routine, regularly observed
             143      prescribing patterns.
             144          (b) "Compounding" does not include:
             145          (i) the preparation of prescription drugs by a pharmacist or pharmacy intern for sale to
             146      another pharmacist or pharmaceutical facility;
             147          (ii) the preparation by a pharmacist or pharmacy intern of any prescription drug in a
             148      dosage form which is regularly and commonly available from a manufacturer in quantities and
             149      strengths prescribed by a practitioner; or


             150          (iii) the preparation of a prescription drug, sterile product, or device which has been
             151      withdrawn from the market for safety reasons.
             152          (19) "Confidential information" has the same meaning as "protected health
             153      information" under the Standards for Privacy of Individually Identifiable Health Information,
             154      45 C.F.R. Parts 160 and 164.
             155          (20) "Controlled substance" has the same definition as in Section 58-37-2 .
             156          (21) "Dietary supplement" has the same meaning as Public Law Title 103, Chapter
             157      417, Sec. 3a(ff) which is incorporated by reference.
             158          (22) "Dispense" means the interpretation, evaluation, and implementation of a
             159      prescription drug order or device or nonprescription drug or device under a lawful order of a
             160      practitioner in a suitable container appropriately labeled for subsequent administration to or use
             161      by a patient, research subject, or an animal.
             162          (23) "Distribute" means to deliver a drug or device other than by administering or
             163      dispensing.
             164          (24) (a) "Drug" means:
             165          (i) a substance recognized in the official United States Pharmacopoeia, Official
             166      Homeopathic Pharmacopoeia of the United States, or Official National Formulary, or any
             167      supplement to any of them, intended for use in the diagnosis, cure, mitigation, treatment, or
             168      prevention of disease in humans or animals;
             169          (ii) a substance that is required by any applicable federal or state law or rule to be
             170      dispensed by prescription only or is restricted to administration by practitioners only;
             171          (iii) a substance other than food intended to affect the structure or any function of the
             172      body of humans or other animals; and
             173          (iv) substances intended for use as a component of any substance specified in
             174      Subsections (24)(a)(i), (ii), (iii), and (iv).
             175          (b) "Drug" does not include dietary supplements.
             176          (25) "Drug product equivalent" means a drug product that is designated as the
             177      therapeutic equivalent of another drug product in the Approved Drug Products with
             178      Therapeutic Equivalence Evaluations prepared by the Center for Drug Evaluation and Research
             179      of the Federal Food and Drug Administration.
             180          (26) "Drug regimen review" includes the following activities:


             181          (a) evaluation of the prescription drug order and patient record for:
             182          (i) known allergies;
             183          (ii) rational therapy-contraindications;
             184          (iii) reasonable dose and route of administration; and
             185          (iv) reasonable directions for use;
             186          (b) evaluation of the prescription drug order and patient record for duplication of
             187      therapy;
             188          (c) evaluation of the prescription drug order and patient record for the following
             189      interactions:
             190          (i) drug-drug;
             191          (ii) drug-food;
             192          (iii) drug-disease; and
             193          (iv) adverse drug reactions; and
             194          (d) evaluation of the prescription drug order and patient record for proper utilization,
             195      including over- or under-utilization, and optimum therapeutic outcomes.
             196          (27) "Drug sample" means a prescription drug packaged in small quantities consistent
             197      with limited dosage therapy of the particular drug, which is marked "sample", is not intended to
             198      be sold, and is intended to be provided to practitioners for the immediate needs of patients for
             199      trial purposes or to provide the drug to the patient until a prescription can be filled by the
             200      patient.
             201          (28) "Electronic signature" means a trusted, verifiable, and secure electronic sound,
             202      symbol, or process attached to or logically associated with a record and executed or adopted by
             203      a person with the intent to sign the record.
             204          (29) "Electronic transmission" means transmission of information in electronic form or
             205      the transmission of the exact visual image of a document by way of electronic equipment.
             206          (30) "Extern" means a college of pharmacy student enrolled in a college coordinated
             207      practical experience program in a health care setting under the supervision of a preceptor, as
             208      defined in this act, and approved by a college of pharmacy.
             209          (31) "Hospital pharmacy" means a pharmacy providing pharmaceutical care to
             210      inpatients of a general acute hospital or specialty hospital licensed by the Department of Health
             211      under Title 26, Chapter 21, Health Care Facility Licensing and Inspection Act.


             212          (32) "Legend drug" has the same meaning as prescription drug.
             213          (33) "Licensed pharmacy technician" means an individual licensed with the division,
             214      that may, under the supervision of a pharmacist, perform the activities involved in the
             215      technician practice of pharmacy.
             216          (34) "Manufacturer" means a person or business physically located in Utah licensed to
             217      be engaged in the manufacturing of drugs or devices.
             218          (35) (a) "Manufacturing" means:
             219          (i) the production, preparation, propagation, conversion, or processing of a drug or
             220      device, either directly or indirectly, by extraction from substances of natural origin or
             221      independently by means of chemical or biological synthesis, or by a combination of extraction
             222      and chemical synthesis, and includes any packaging or repackaging of the substance or labeling
             223      or relabeling of its container; and
             224          (ii) the promotion and marketing of such drugs or devices.
             225          (b) "Manufacturing" includes the preparation and promotion of commercially available
             226      products from bulk compounds for resale by pharmacies, practitioners, or other persons.
             227          (c) "Manufacturing" does not include the preparation or compounding of a drug by a
             228      pharmacist, pharmacy intern, or practitioner for that individual's own use or the preparation,
             229      compounding, packaging, labeling of a drug, or incident to research, teaching, or chemical
             230      analysis.
             231          (36) "Medical order" means a lawful order of a practitioner which may include a
             232      prescription drug order.
             233          (37) "Medication profile" or "profile" means a record system maintained as to drugs or
             234      devices prescribed for a pharmacy patient to enable a pharmacist or pharmacy intern to analyze
             235      the profile to provide pharmaceutical care.
             236          (38) "Misbranded drug or device" means a drug or device considered misbranded under
             237      21 U.S.C.S. Sec. 352 (2003).
             238          (39) (a) "Nonprescription drug" means a drug which:
             239          (i) may be sold without a prescription; and
             240          (ii) is labeled for use by the consumer in accordance with federal law.
             241          (b) "Nonprescription drug" includes homeopathic remedies.
             242          (40) "Nonresident pharmacy" means a pharmacy located outside of Utah that sells to a


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


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


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


             336          (i) pursuant to a lawful order of a practitioner when one is required by law; and
             337          (ii) in accordance with written guidelines or protocols:
             338          (A) established by the licensed facility in which the prescription drug or device is to be
             339      administered on an inpatient basis; or
             340          (B) approved by the division, in collaboration with the board and the Physicians
             341      Licensing Board, created in Section 58-67-201 , if the prescription drug or device is to be
             342      administered on an outpatient basis solely by a licensed pharmacist;
             343          (d) participating in drug utilization review;
             344          (e) ensuring proper and safe storage of drugs and devices;
             345          (f) maintaining records of drugs and devices in accordance with state and federal law
             346      and the standards and ethics of the profession;
             347          (g) providing information on drugs or devices, which may include advice relating to
             348      therapeutic values, potential hazards, and uses;
             349          (h) providing drug product equivalents;
             350          (i) supervising pharmacist's supportive personnel, pharmacy interns, and pharmacy
             351      technicians;
             352          (j) providing patient counseling, including adverse and therapeutic effects of drugs;
             353          (k) providing emergency refills as defined by rule;
             354          (l) telepharmacy; and
             355          (m) formulary management intervention.
             356          (57) "Practice of telepharmacy" means the practice of pharmacy through the use of
             357      telecommunications and information technologies.
             358          (58) "Practice of telepharmacy across state lines" means the practice of pharmacy
             359      through the use of telecommunications and information technologies that occurs when the
             360      patient is physically located within one jurisdiction and the pharmacist is located in another
             361      jurisdiction.
             362          (59) "Practitioner" means an individual currently licensed, registered, or otherwise
             363      authorized by the appropriate jurisdiction to prescribe and administer drugs in the course of
             364      professional practice.
             365          (60) "Prescribe" means to issue a prescription:
             366          (a) orally or in writing; or


             367          (b) by telephone, facsimile transmission, computer, or other electronic means of
             368      communication as defined by division rule.
             369          (61) "Prescription" means an order issued:
             370          (a) by a licensed practitioner in the course of that practitioner's professional practice or
             371      by collaborative pharmacy practice agreement; and
             372          (b) for a controlled substance or other prescription drug or device for use by a patient
             373      or an animal.
             374          (62) "Prescription device" means an instrument, apparatus, implement, machine,
             375      contrivance, implant, in vitro reagent, or other similar or related article, and any component
             376      part or accessory, which is required under federal or state law to be prescribed by a practitioner
             377      and dispensed by or through a person or entity licensed under this chapter or exempt from
             378      licensure under this chapter.
             379          (63) "Prescription drug" means a drug that is required by federal or state law or rule to
             380      be dispensed only by prescription or is restricted to administration only by practitioners.
             381          (64) "Retail pharmacy" means a pharmaceutical facility dispensing prescription drugs
             382      and devices to the general public.
             383          (65) "Self-audit" means an internal evaluation of a pharmacy to determine compliance
             384      with this chapter.
             385          (66) "Supervising pharmacist" means a pharmacist who is overseeing the operation of
             386      the pharmacy during a given day or shift.
             387          (67) "Supportive personnel" means unlicensed individuals who:
             388          (a) may assist a pharmacist, pharmacist preceptor, pharmacy intern, or licensed
             389      pharmacy technician in nonjudgmental duties not included in the definition of the practice of
             390      pharmacy, practice of a pharmacy intern, or practice of a licensed pharmacy technician, and as
             391      those duties may be further defined by division rule adopted in collaboration with the board;
             392      and
             393          (b) are supervised by a pharmacist in accordance with rules adopted by the division in
             394      collaboration with the board.
             395          (68) "Unlawful conduct" is as defined in Sections 58-1-501 and 58-17b-501 .
             396          (69) "Unprofessional conduct" is as defined in Sections 58-1-501 and 58-17b-502 and
             397      may be further defined by rule.


             398          (70) "Veterinary pharmaceutical facility" means a pharmaceutical facility that
             399      dispenses drugs intended for use by animals or for sale to veterinarians for the administration
             400      for animals.
             401          Section 4. Section 58-17b-622 is enacted to read:
             402          58-17b-622. Pharmacy benefit management services -- Auditing of pharmacy
             403      records -- Appeals.
             404          (1) For purposes of this section:
             405          (a) "Audit" means a review of the records of a pharmacy by or on behalf of an entity
             406      that finances or reimburses the cost of health care services or pharmaceutical products.
             407          (b) "Entity" includes:
             408          (i) a pharmacy benefits manager or coordinator;
             409          (ii) a health benefit plan;
             410          (iii) a third party administrator as defined in Section 31A-1-301 ;
             411          (iv) a state agency; or
             412          (v) a company, group, or agent that represents, or is engaged by, one of the entities
             413      described in Subsections (1)(b)(i) through (iv).
             414          (c) "Fraud" means an intentional act of deception, misrepresentation, or concealment in
             415      order to gain something of value.
             416          (d) "Health benefit plan" means:
             417          (i) a health benefit plan as defined in Section 31A-1-301 ; or
             418          (ii) a health, dental, medical, Medicare supplement, or conversion program offered
             419      under Title 49, Chapter 20, Public Employees' Benefit and Insurance Program Act.
             420          (2) (a) Except as provided in Subsection (2)(b), this section applies to:
             421          (i) a contract for the audit of a pharmacy entered into, amended, or renewed on or after
             422      July 1, 2012; and
             423          (ii) an entity that conducts an audit of the pharmacy records of a pharmacy licensed
             424      under this chapter.
             425          (b) This section does not apply to an audit of pharmacy records for the purpose of
             426      detecting fraud in the:
             427          (i) state Medicaid program if the audit is conducted:
             428          (A) under the provisions of Title 63J, Chapter 4a, Office of Inspector General of


             429      Medicaid Services; and
             430          (B) by the Office of the Inspector General, or its designee; or
             431          (ii) the federal Medicare program, when the audit is authorized under federal
             432      regulations or requirements.
             433          (3) (a) An audit that involves clinical or professional judgment shall be conducted by
             434      or in consultation with a licensed pharmacist who is employed by or working with the auditing
             435      entity.
             436          (b) If an audit is conducted on site at a pharmacy, the entity conducting the audit:
             437          (i) shall give the pharmacy 10 days advanced written notice of:
             438          (A) the audit; and
             439          (B) the range of prescription numbers included in the audit; and
             440          (ii) may not audit a pharmacy during the first five business days of the month, unless
             441      the pharmacy agrees to the timing of the audit.
             442          (c) An entity may not audit claims:
             443          (i) submitted more than 12 months prior to the audit, unless:
             444          (A) required by federal law; or
             445          (B) the originating prescription is dated in the preceding 12 months; or
             446          (ii) that exceed 125 selected prescription claims.
             447          (4) (a) An entity may not:
             448          (i) include dispensing fees in the calculations of overpayments;
             449          (ii) recoup funds for prescription clerical or record keeping errors, including
             450      typographical errors, scrivener's errors, and computer errors on a required document or record
             451      in the absence of any other evidence deemed fraudulent; or
             452          (iii) collect any funds, charge-backs, or penalties until the audit and all appeals are
             453      final, unless the entity has evidence the actions by the pharmacy constituted fraud.
             454          (b) Auditors shall only have access to previous audit reports on a particular pharmacy
             455      if the previous audit was conducted by the same entity.
             456          (5) A pharmacy subject to an audit may use the following records to validate a claim
             457      for a prescription, refill, or change in a prescription:
             458          (a) electronic or physical copies of records of a health care facility, or a health care
             459      provider with prescribing authority; and


             460          (b) any prescription that complies with state law.
             461          (6) (a) An entity that audits a pharmacy shall provide the pharmacy with a preliminary
             462      audit report, delivered to the pharmacy or its corporate office of record within 60 days after
             463      completion of the audit.
             464          (b) A pharmacy has 30 days following receipt of the preliminary audit report to
             465      respond to questions, provide additional documentation, and comment on and clarify findings
             466      of the audit. Receipt of the report shall be based on the postmark date or the date of a
             467      computer transmission if transferred electronically.
             468          (7) If an audit results in the dispute or denial of a claim, the entity conducting the audit
             469      shall allow the pharmacy to re-submit a claim using any commercially reasonable method,
             470      including fax, mail, or electronic claims submission provided that the period of time when a
             471      claim may be resubmitted has not expired under the rules of the plan sponsor.
             472          (8) (a) Within 120 days after the completion of the appeals process under Subsection
             473      (9), a final audit report shall be delivered to the pharmacy or its corporate office of record.
             474          (b) The final audit report shall include a disclosure of any money recovered by the
             475      entity that conducted the audit.
             476          (9) (a) An entity that audits a pharmacy shall establish a written appeals process for
             477      appealing a preliminary audit report and a final audit report, and shall provide the pharmacy
             478      with notice of the written appeals process. If the pharmacy benefit manager's contract or
             479      provider manual contains the information required by this Subsection (9)(a), the requirement
             480      for notice is met.
             481          (b) The appeals process under Subsection (9)(a) shall offer the pharmacy the option to
             482      submit an appeal of the final audit report to binding arbitration or mediation pursuant to
             483      contract or provider agreement with the entity or to civil action if binding arbitration or
             484      mediation are not otherwise specified in the contract or provider agreement.
             485          (10) This section does not apply to any investigative pharmacy audit that involves
             486      fraud.


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