HOUSE BILL 482

48th legislature - STATE OF NEW MEXICO - first session, 2007

INTRODUCED BY

John A. Heaton

AN ACT

RELATING TO PHARMACY; ESTABLISHING A PHARMACY RECORDS AUDIT PROCESS; PROVIDING FOR AN APPEAL PROCESS.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF NEW MEXICO:

     Section 1. A new section of the Pharmacy Act is enacted to read:

     "[NEW MATERIAL] AUDIT OF PHARMACY RECORDS.--

          A. As used in this section, "entity" means a managed care company, insurance company, third-party payor or the representative of the managed care company, insurance company or third-party payor.

          B. An audit of the records of a pharmacy by an entity shall be conducted in accordance with the following criteria:

                (1) the entity conducting the initial on-site audit shall give the pharmacy notice at least two weeks prior to conducting the initial on-site audit for each audit cycle;

                (2) an audit that involves clinical or professional judgement shall be conducted by or in consultation with a pharmacist;

                (3) a clerical or record-keeping error, regarding a required document or record, shall not necessarily constitute fraud but such a claim:

                     (a) may be subject to recoupment; and

                     (b) shall not be subject to criminal penalties without proof of intent to commit fraud;

                (4) a pharmacy may use the records of a hospital, physician or other authorized practitioner of the healing arts for drugs or medicinal supplies written or transmitted by any means of communication for purposes of validating the pharmacy record with respect to orders or refills of a dangerous drug or narcotic drug;

                (5) a finding of an overpayment or underpayment shall not be a projection based on the number of patients served having a similar diagnosis or on the number of similar orders or refills for similar drugs and recoupment of claims shall be based on the actual overpayment or underpayment unless the projection for overpayment or underpayment is part of a settlement as agreed to by the pharmacy;

                (6) each pharmacy shall be audited under the same standards and parameters as other similarly situated pharmacies audited by the entity;

                (7) a pharmacy shall be allowed at least sixty days following receipt of the preliminary audit report in which to produce documentation to address any discrepancy found during an audit;

                (8) the period covered by an audit shall not exceed one year from the date the claim was submitted to or adjudicated by an entity;

                (9) an audit shall not be initiated or scheduled during the first seven calendar days of a month due to the high volume of prescriptions filled during that time unless otherwise consented to by the pharmacy;

                (10) the preliminary audit report shall be delivered to the pharmacy within one hundred twenty days after conclusion of the audit and the final report shall be delivered to the pharmacy within six months after receipt of the preliminary audit report or final appeal, as provided for in Subsection C of this section, whichever is later;

                (11) the audit criteria set forth in this subsection shall apply only to audits of claims submitted for payment after July 1, 2007; and

                (12) notwithstanding any other provision in this subsection, the entity conducting the audit shall not use the accounting practice of extrapolation in calculating recoupments or penalties for audits.

          C. Recoupment of any disputed funds shall occur after final internal disposition of the audit, including the appeals process set forth in Subsection D of this section.

          D. Each entity conducting an audit shall establish an appeals process under which a pharmacy may appeal an unfavorable preliminary audit report to the entity. If, following the appeal, the entity finds that an unfavorable audit report or any portion of the audit is unsubstantiated, the entity shall dismiss the audit report or the report of the audit without the necessity of any further proceedings.

          E. Each entity conducting an audit shall provide a copy of the final audit report, after completion of any review process, to the plan sponsor.

          F. This section does not apply to any investigative audit that involves fraud, willful misrepresentation or abuse."

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