As Passed by the Senate

130th General Assembly
Regular Session
2013-2014
Am. S. B. No. 258


Senator Balderson 

Cosponsors: Senators Beagle, Brown, Coley, Gentile, Hite, LaRose, Lehner, Oelslager, Patton, Peterson, Schaffer, Uecker 



A BILL
To enact sections 3901.41, 3901.411, 3901.412, 1
3901.413, 3901.414, and 3901.415 of the Revised 2
Code to establish standards for the performance of 3
pharmacy audits in Ohio.4


BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF OHIO:

       Section 1.  That sections 3901.41, 3901.411, 3901.412, 5
3901.413, 3901.414, and 3901.415 of the Revised Code be enacted to 6
read as follows:7

       Sec. 3901.41.  As used in this section and sections 3901.411 8
to 3901.415 of the Revised Code:9

       (A) "Auditing entity" means any person or government entity 10
that performs a pharmacy audit, including a payer, a pharmacy 11
benefit manager, or a third-party administrator licensed under 12
Chapter 3959. of the Revised Code.13

       (B) "Business day" means any day of the week excluding 14
Saturday, Sunday, and a legal holiday, as defined in section 1.14 15
of the Revised Code.16

       (C) "Concurrent review" means a claims review within five 17
business days of submission of claims for payment for the 18
provision of dangerous drugs for which the payer or the auditing 19
entity does not impose a penalty or demand to recoup money from 20
the pharmacy in any amount.21

        (D) "Dangerous drug," "pharmacy," "practice of pharmacy," and 22
"prescription" have the same meanings as in section 4729.01 of the 23
Revised Code.24

       (E) "Payer" means any of the following that pays for or 25
processes a claim for payment for the provision of dangerous drugs 26
or pharmacy services:27

       (1) A health insuring corporation, as defined in section 28
1751.01 of the Revised Code;29

       (2) A person authorized to engage in the business of sickness 30
and accident insurance under Title XXXIX of the Revised Code;31

       (3) A person or government entity providing coverage of 32
dangerous drugs or pharmacy services to individuals on a 33
self-insurance basis;34

       (4) A group health plan, as defined in 29 U.S.C. 1167;35

       (5) A service benefit plan, as referenced in 42 U.S.C. 36
1396a(a)(25);37

       (6) A medicaid managed care organization that has entered 38
into a contract with the department of medicaid pursuant to 39
section 5167.10 of the Revised Code;40

       (7) Any other person or government entity that is, by law, 41
contract, or agreement, responsible for paying for or processing a 42
claim for payment for the provision of dangerous drugs or pharmacy 43
services.44

       (F) "Pharmacy audit" means a review of one or more pharmacy 45
records conducted by an auditing entity, one purpose of which is 46
to identify discrepancies in claims for payment for the provision 47
of dangerous drugs or pharmacy services. "Pharmacy audit" does not 48
include concurrent review.49

       (G) "Pharmacy benefit manager" means a person that provides 50
administrative services related to the processing of claims for 51
payment for the provision of dangerous drugs or pharmacy services, 52
including performing pharmacy audit compliance, negotiating 53
pharmaceutical rebate agreements, developing and managing drug 54
formularies and preferred drug lists, and administering programs 55
for payers' prior authorization of claims for payment for the 56
provision of dangerous drugs or pharmacy services.57

       (H) "Pharmacy record" means any record stored electronically 58
or as a hard copy by a pharmacy that relates to the provision of 59
dangerous drugs or pharmacy services or any other component of 60
pharmacist care that is included in the practice of pharmacy.61

       Sec. 3901.411.  (A) Except as provided in division (B) of 62
this section, an auditing entity is subject to all of the 63
following conditions when performing a pharmacy audit in this 64
state on or after April 1, 2014:65

       (1) If it is necessary that the pharmacy audit be performed 66
on the premises of a pharmacy, the auditing entity shall give the 67
pharmacy that is the subject of the audit written notice of the 68
date or dates on which the audit will be performed and the range 69
of prescription numbers from which the auditing entity will select 70
pharmacy records to audit. Notice of the date or dates on which 71
the audit will be performed shall be given not less than ten 72
business days before the date the audit is to commence. Notice of 73
the range of prescription numbers from which the auditing entity 74
will select pharmacy records to audit shall be received by the 75
pharmacy not less than seven business days before the date of the 76
audit is to commence.77

       (2) The auditing entity shall not include in the pharmacy 78
audit a review of a claim for payment for the provision of 79
dangerous drugs or pharmacy services if the date of the pharmacy's 80
initial submission of the claim for payment occurred more than 81
twenty-four months before the date the audit commences.82

       (3) Absent an indication that there was an error in the 83
dispensing of a drug, the auditing entity or payer shall not seek 84
to recoup from the pharmacy that is the subject of the audit any 85
amount that the pharmacy audit identifies as being the result of 86
clerical or recordkeeping errors in the absence of financial harm. 87
For purposes of this provision, an error in the dispensing of a 88
drug is any of the following: selecting an incorrect drug, issuing 89
incorrect directions, or dispensing a drug to the incorrect 90
patient.91

       (4) The auditing entity shall not use the accounting practice 92
of extrapolation when calculating a monetary penalty to be imposed 93
or amount to be recouped as the result of the pharmacy audit.94

       (B)(1) The condition in division (A)(1) of this section does 95
not apply if, prior to the audit, the auditing entity has 96
evidence, from its review of claims data, statements, or physical 97
evidence or its use of other investigative methods, indicating 98
that fraud or other intentional or willful misrepresentation 99
exists.100

        (2) The condition in division (A)(3) of this section does not 101
apply if the auditing entity has evidence, from its review of 102
claims data, statements, or physical evidence or its use of other 103
investigative methods, indicating that fraud or other intentional 104
or willful misrepresentation exists.105

        (3) Division (A)(4) of this section does not apply when the 106
accounting practice of extrapolation is required by state or 107
federal law.108

       Sec. 3901.412.  A pharmacy may do any of the following when a 109
pharmacy audit is performed:110

       (A) Validate a pharmacy record by using original or 111
photocopied records from hospitals, physicians, or other health 112
care providers;113

       (B) Validate one or more claims for payment for the provision 114
of dangerous drugs or pharmacy services by using either of the 115
following:116

        (1) An original pharmacy record or photocopy of the record;117

       (2) An original prescription or photocopy of the prescription 118
in any form that constitutes a valid prescription in this state, 119
including a written prescription, a prescription made through an 120
electronic prescribing system, a prescription delivered by 121
facsimile, a prescription made by issuing an order for medication 122
administration, and the record a pharmacist maintains under 123
section 4729.37 of the Revised Code documenting a prescription 124
received by telephone.125

       (C) Resubmit a disputed or denied claim for payment using any 126
commercially reasonable method of resubmission, including 127
resubmission by facsimile, mail, or electronic means, as long as 128
the time period for resubmissions established by the relevant 129
payer has not expired.130

       Sec. 3901.413.  (A) Except as provided in division (B) of 131
this section, all of the following apply after a pharmacy audit is 132
completed:133

        (1) A pharmacy shall be given not less than thirty days from 134
the date of the on-sight audit to provide the auditing entity any 135
additional information necessary to complete the preliminary audit 136
report.137

       (2) Not later than sixty business days after the audit is 138
completed, the auditing entity shall deliver a preliminary audit 139
report to the pharmacy that was the subject of the audit.140

       (3) A pharmacy that disputes any finding in the preliminary 141
audit report may submit documentation to the auditing entity to 142
appeal the finding. A pharmacy shall be given not less than thirty 143
business days to make the submission and may request an extension 144
of the time period given. The auditing entity shall grant a 145
request for an extension if it is reasonable.146

       A pharmacy's submission of documentation to appeal the 147
finding shall be made in accordance with the procedure the 148
auditing entity has established under section 3901.414 of the 149
Revised Code.150

       (4)(a) An auditing entity shall deliver a final audit report 151
to the pharmacy that was the subject of the audit. Except as 152
provided in division (A)(4)(b) of this section, the report shall 153
be delivered not later than one hundred twenty business days after 154
the later of a pharmacy's receipt of a preliminary audit report.155

       (b) If an auditing entity has granted a pharmacy's request 156
for an extension of the time to submit documentation to appeal a 157
finding in the preliminary audit report under division (A)(3) of 158
this section, the time limit described in division (A)(4)(a) of 159
this section for the delivery of the final audit report is waived. 160
Instead, the auditing entity shall deliver the final audit report 161
not later than one hundred twenty days after the pharmacy's 162
submission of the documentation.163

       (B) The provisions of division (A) of this section do not 164
apply if the auditing entity has evidence, from its review of 165
claims data, statements, or physical evidence or its use of other 166
investigative methods, indicating that fraud or other intentional 167
or willful misrepresentation exists.168

       Sec. 3901.414.  Each auditing entity in this state shall 169
establish in writing separate procedures for a pharmacy to appeal 170
one or more findings in a preliminary audit report issued under 171
section 3901.413 of the Revised Code.172

       Sec. 3901.415.  Sections 3901.411 to 3901.414 of the Revised 173
Code shall not apply to an auditing entity that is a medicaid 174
managed care organization if application of those sections to the 175
entity would be in violation of federal law.176