S T A T E   O F   N E W   Y O R K
 ________________________________________________________________________
 
                                   6733
 
                        2017-2018 Regular Sessions
 
                           I N  A S S E M B L Y
 
                              March 16, 2017
                                ___________
 
 Introduced by M. of A. LAVINE -- read once and referred to the Committee
   on Health
 
 AN  ACT to amend the public health law, in relation to audits of pharma-
   cies
 
   THE PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND  ASSEM-
 BLY, DO ENACT AS FOLLOWS:

   Section  1.  The  public health law is amended by adding a new section
 280-c to read as follows:
   § 280-C. PHARMACY AUDITS BY  PHARMACY  BENEFIT  MANAGERS.  1.    DEFI-
 NITIONS.  AS  USED  IN  THIS SECTION, THE FOLLOWING TERMS SHALL HAVE THE
 FOLLOWING MEANINGS:
   (A) "PHARMACY BENEFIT MANAGER" SHALL  HAVE  THE  SAME  MEANING  AS  IN
 SECTION TWO HUNDRED EIGHTY-A OF THIS ARTICLE.
   (B)  "PHARMACY" SHALL MEAN A PHARMACY THAT HAS CONTRACTED WITH A PHAR-
 MACY BENEFIT MANAGER FOR THE PROVISION OF PHARMACY SERVICES.
   2. WHEN CONDUCTING AN AUDIT OF A PHARMACY'S RECORDS, A PHARMACY  BENE-
 FIT MANAGER SHALL:
   (A)  NOT CONDUCT AN ON-SITE AUDIT OF A PHARMACY AT ANY TIME DURING THE
 FIRST THREE CALENDAR DAYS OF A MONTH;
   (B) NOTIFY THE PHARMACY OR ITS CONTRACTING AGENT NO LATER THAN FIFTEEN
 DAYS BEFORE THE DATE OF INITIAL ON-SITE AUDIT. SUCH NOTIFICATION TO  THE
 PHARMACY  OR  ITS CONTRACTING AGENT SHALL BE IN WRITING DELIVERED EITHER
 (I) BY MAIL OR COMMON CARRIER, RETURN RECEIPT REQUESTED, OR  (II)  ELEC-
 TRONICALLY WITH ELECTRONIC RECEIPT CONFIRMATION, ADDRESSED TO THE SUPER-
 VISING PHARMACIST OF RECORD AND PHARMACY CORPORATE OFFICE WHERE APPLICA-
 BLE, AT LEAST FIFTEEN DAYS BEFORE THE DATE OF AN INITIAL ON-SITE AUDIT;
   (C)  LIMIT  THE  AUDIT  PERIOD  TO TWENTY-FOUR MONTHS AFTER THE DATE A
 CLAIM IS SUBMITTED TO OR ADJUDICATED BY THE PHARMACY BENEFIT MANAGER;
   (D) INCLUDE IN THE WRITTEN ADVANCE NOTICE OF AN ON-SITE AUDIT THE LIST
 OF SPECIFIC PRESCRIPTION NUMBERS TO BE INCLUDED IN THE AUDIT THAT MAY OR
 MAY NOT INCLUDE THE FINAL TWO DIGITS OF THE PRESCRIPTION NUMBERS;
 
  EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
                       [ ] is old law to be omitted.
              

                                                            LBD06021-04-7

 A. 6733                             2
 
   (E) USE THE WRITTEN AND VERIFIABLE RECORDS OF A HOSPITAL, PHYSICIAN OR
 OTHER AUTHORIZED PRACTITIONER, WHICH ARE TRANSMITTED  BY  ANY  MEANS  OF
 COMMUNICATION, TO VALIDATE THE PHARMACY RECORDS IN ACCORDANCE WITH STATE
 AND FEDERAL LAW;
   (F)  LIMIT  THE  NUMBER  OF  PRESCRIPTIONS AUDITED TO NO MORE THAN ONE
 HUNDRED RANDOMLY SELECTED IN A TWELVE-MONTH PERIOD, EXCEPT IN  CASES  OF
 FRAUD;
   (G)  PROVIDE  THE PHARMACY OR ITS CONTRACTING AGENT WITH A COPY OF THE
 PRELIMINARY AUDIT REPORT WITHIN FORTY-FIVE DAYS AFTER THE CONCLUSION  OF
 THE AUDIT;
   (H)  BE  ALLOWED  TO  CONDUCT A FOLLOW-UP AUDIT ON-SITE IF A REMOTE OR
 DESK AUDIT REVEALS THE NECESSITY FOR A REVIEW OF ADDITIONAL CLAIMS;
   (I) IN THE CASE OF INVOICE AUDITS, ACCEPT AS VALIDATION INVOICES  FROM
 ANY  WHOLESALER  REGISTERED  WITH THE DEPARTMENT OF EDUCATION FROM WHICH
 THE PHARMACY HAS PURCHASED PRESCRIPTION DRUGS OR, IN THE CASE OF DURABLE
 MEDICAL EQUIPMENT OR SICKROOM  SUPPLIES,  INVOICES  FROM  AN  AUTHORIZED
 DISTRIBUTOR OTHER THAN A WHOLESALER;
   (J)  PROVIDE THE PHARMACY OR ITS CONTRACTING AGENT WITH THE ABILITY TO
 PROVIDE  DOCUMENTATION  TO  ADDRESS  A  DISCREPANCY  OR  AUDIT  FINDING,
 PROVIDED  THAT SUCH DOCUMENTATION MUST BE RECEIVED BY THE PHARMACY BENE-
 FIT MANAGER NO LATER THAN THE  FORTY-FIFTH  DAY  AFTER  THE  PRELIMINARY
 AUDIT  REPORT WAS PROVIDED TO THE PHARMACY OR ITS CONTRACTING AGENT. THE
 PHARMACY BENEFIT MANAGER SHALL CONSIDER A REASONABLE  REQUEST  FROM  THE
 PHARMACY  FOR AN EXTENSION OF TIME TO SUBMIT DOCUMENTATION TO ADDRESS OR
 CORRECT ANY FINDINGS IN THE REPORT; AND
   (K) PROVIDE THE PHARMACY OR ITS CONTRACTING AGENT WITH THE FINAL AUDIT
 REPORT NO LATER THAN SIXTY DAYS  AFTER  THE  INITIAL  AUDIT  REPORT  WAS
 PROVIDED TO THE PHARMACY OR ITS CONTRACTING AGENT.
   3. ANY CLAIM THAT WAS RETROACTIVELY DENIED FOR A CLERICAL ERROR, TYPO-
 GRAPHICAL  ERROR,  SCRIVENER'S  ERROR OR COMPUTER ERROR SHALL BE PAID IF
 THE PRESCRIPTION WAS PROPERLY AND CORRECTLY DISPENSED, UNLESS A  PATTERN
 OF  SUCH  ERRORS  EXISTS,  FRAUDULENT  BILLING  IS  ALLEGED OR THE ERROR
 RESULTS IN ACTUAL FINANCIAL LOSS TO THE ENTITY.  A CLERICAL ERROR IS  AN
 ERROR THAT DOES NOT RESULT IN ACTUAL FINANCIAL HARM TO THE COVERED ENTI-
 TY OR CONSUMER AND DOES NOT INCLUDE THE DISPENSING OF AN INCORRECT DOSE,
 AMOUNT  OR  TYPE  OF MEDICATION OR DISPENSING A PRESCRIPTION DRUG TO THE
 WRONG PERSON.
   4. THIS SECTION SHALL NOT APPLY TO:
   (A) AUDITS IN WHICH SUSPECTED FRAUDULENT ACTIVITY OR OTHER INTENTIONAL
 OR WILLFUL MISREPRESENTATION IS EVIDENCED BY A PHYSICAL  REVIEW,  REVIEW
 OF CLAIMS DATA OR STATEMENTS, OR OTHER INVESTIGATIVE METHODS; OR
   (B) AUDITS OF CLAIMS PAID FOR BY FEDERALLY FUNDED PROGRAMS; OR
   (C) CONCURRENT REVIEWS OR DESK AUDITS THAT OCCUR WITHIN THREE BUSINESS
 DAYS OF TRANSMISSION OF A CLAIM AND WHERE NO CHARGEBACK OR RECOUPMENT IS
 DEMANDED.
   §  2.  This  act  shall take effect on the sixtieth day after it shall
 have become a law.