HBIC/HB 482

Page 1

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:

"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 judgment 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:

HBIC/HB 482

Page 2

(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 controlled substance;

(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 entity demonstrates a statistically

justifiable method of projection or 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

twenty-one business days, with reasonable extensions allowed,

following receipt of the preliminary audit report in which to

produce documentation to address any discrepancy found during

HBIC/HB 482

Page 3

an audit;

(8) the period covered by an audit shall not

exceed two years, unless otherwise provided by contractual

agreement, from the date the claim was submitted to or

adjudicated by an entity or unless it conflicts with state or

federal law;

(9) an audit shall not be initiated or

scheduled during the first five 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, with

reasonable extensions allowed, 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.

Should the identified discrepancy for an individual audit

exceed twenty-five thousand dollars ($25,000), future payments

to the pharmacy may be withheld pending finalization of the

audit.

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

unsubstantiated portion of the report of the audit without the

necessity of any further proceedings.

E. This section does not apply to any

investigative audit that involves probable or potential fraud,

willful misrepresentation."

HBIC/HB 482

Page 4