Illinois General Assembly - Full Text of SB0757
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Full Text of SB0757  103rd General Assembly



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1    AN ACT concerning regulation.
2    Be it enacted by the People of the State of Illinois,
3represented in the General Assembly:
4    Section 5. The Illinois Insurance Code is amended by
5adding Section 513b7 as follows:
6    (215 ILCS 5/513b7 new)
7    Sec. 513b7. Pharmacy audits.
8    (a) As used in this Section:
9    "Audit" means any physical on-site, remote electronic, or
10concurrent review of a pharmacist service submitted to the
11pharmacy benefit manager or pharmacy benefit manager affiliate
12by a pharmacist or pharmacy for payment.
13    "Auditing entity" means a person or company that performs
14a pharmacy audit.
15    "Extrapolation" means the practice of inferring a
16frequency of dollar amount of overpayments, underpayments,
17nonvalid claims, or other errors on any portion of claims
18submitted, based on the frequency of dollar amount of
19overpayments, underpayments, nonvalid claims, or other errors
20actually measured in a sample of claims.
21    "Misfill" means a prescription that was not dispensed; a
22prescription that was dispensed but was an incorrect dose,
23amount, or type of medication; a prescription that was



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1dispensed to the wrong person; a prescription in which the
2prescriber denied the authorization request; or a prescription
3in which an additional dispensing fee was charged.
4    "Pharmacy audit" means an audit conducted of any records
5of a pharmacy for prescriptions dispensed or nonproprietary
6drugs or pharmacist services provided by a pharmacy or
7pharmacist to a covered person.
8    "Pharmacy record" means any record stored electronically
9or as a hard copy by a pharmacy that relates to the provision
10of a prescription or pharmacy services or other component of
11pharmacist care that is included in the practice of pharmacy.
12    (b) Notwithstanding any other law, when conducting a
13pharmacy audit, an auditing entity shall:
14        (1) not conduct an on-site audit of a pharmacy at any
15    time during the first 3 business days of a month or the
16    first 2 weeks and final 2 weeks of the calendar year or
17    during a declared State or federal public health
18    emergency;
19        (2) notify the pharmacy or its contracting agent no
20    later than 14 business days before the date of initial
21    on-site audit; the notification to the pharmacy or its
22    contracting agent shall be in writing and delivered
23    either:
24            (A) by mail or common carrier, return receipt
25        requested; or
26            (B) electronically, not including facsimilie, with



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1        electronic receipt confirmation and delivered during
2        normal business hours of operation, addressed to the
3        supervising pharmacist and pharmacy corporate office,
4        if applicable, at least 14 business days before the
5        date of an initial on-site audit;
6        (3) limit the audit period to 24 months after the date
7    a claim is submitted to or adjudicated by the pharmacy
8    benefit manager;
9        (4) provide in writing the list of specific
10    prescription numbers to be included in the audit 14
11    business days before the on-site audit that may or may not
12    include the final 2 digits of the prescription numbers;
13        (5) use the written and verifiable records of a
14    hospital, physician, or other authorized practitioner that
15    are transmitted by any means of communication to validate
16    the pharmacy records in accordance with State and federal
17    law;
18        (6) limit the number of prescriptions audited to no
19    more than 100 prescriptions per audit and an entity shall
20    not audit more than 200 prescriptions in any 12-month
21    period, except in cases of fraud, waste, or abuse; a
22    refill shall not constitute a separate prescription and a
23    pharmacy shall not be audited more than once every 6
24    months;
25        (7) provide the pharmacy or its contracting agent with
26    a copy of the preliminary audit report within 45 days



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1    after the conclusion of the audit;
2        (8) be allowed to conduct a follow-up audit on site if
3    a remote or desk audit reveals the necessity for a review
4    of additional claims;
5        (9) accept invoice audits as validation invoices from
6    any wholesaler registered with the Department of Financial
7    and Professional Regulation from which the pharmacy has
8    purchased prescription drugs or, in the case of durable
9    medical equipment or sickroom supplies, invoices from an
10    authorized distributor other than a wholesaler;
11        (10) provide the pharmacy or its contracting agent
12    with the ability to provide documentation to address a
13    discrepancy or audit finding if the documentation is
14    received by the pharmacy benefit manager no later than the
15    45th day after the preliminary audit report was provided
16    to the pharmacy or its contracting agent; the pharmacy
17    benefit manager shall consider a reasonable request from
18    the pharmacy for an extension of time to submit
19    documentation to address or correct any findings in the
20    report;
21        (11) be required to provide the pharmacy or its
22    contracting agent with the final audit report no later
23    than 90 days after the initial audit report was provided
24    to the pharmacy or its contracting agent;
25        (12) conduct the audit in consultation with a
26    pharmacist in specific cases if the audit involves



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1    clinical or professional judgment;
2        (13) not chargeback, recoup, or collect penalties from
3    a pharmacy until the time period to file an appeal of the
4    final pharmacy audit report has passed or the appeals
5    process has been exhausted, whichever is later, unless the
6    identified discrepancy is expected to exceed $25,000, in
7    which case the auditing entity may withhold future
8    payments in excess of that amount until the final
9    resolution of the audit;
10        (14) not compensate the employee or contractor
11    conducting the audit based on a percentage of the amount
12    claimed or recouped pursuant to the audit;
13        (15) not use extrapolation to calculate penalties or
14    amounts to be charged back or recouped unless otherwise
15    required by federal law or regulation; any amount to be
16    charged back or recouped due to overpayment may not exceed
17    the amount the pharmacy was overpaid;
18        (16) not include dispensing fees in the calculation of
19    overpayments unless a prescription is considered a
20    misfill, the medication is not delivered to the patient,
21    the prescription is not valid, or the prescriber denies
22    authorizing the prescription; and
23        (17) conduct a pharmacy audit under the same standards
24    and parameters as conducted for other similarly situated
25    pharmacies audited by the auditing entity.
26    (c) Except as otherwise provided by State or federal law,



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1an auditing entity conducting a pharmacy audit may have access
2to a pharmacy's previous audit report only if the report was
3prepared by that auditing entity.
4    (d) Information collected during a pharmacy audit shall be
5confidential by law, except that the auditing entity
6conducting the pharmacy audit may share the information with
7the health benefit plan for which a pharmacy audit is being
8conducted and with any regulatory agencies and law enforcement
9agencies as required by law.
10    (e) A pharmacy may not be subject to a chargeback or
11recoupment for a clerical or recordkeeping error in a required
12document or record, including a typographical error or
13computer error, unless the pharmacy benefit manager can
14provide proof of intent to commit fraud or such error results
15in actual financial harm to the pharmacy benefit manager, a
16health plan managed by the pharmacy benefit manager, or a
18    (f) A pharmacy shall have the right to file a written
19appeal of a preliminary and final pharmacy audit report in
20accordance with the procedures established by the entity
21conducting the pharmacy audit.
22    (g) No interest shall accrue for any party during the
23audit period, beginning with the notice of the pharmacy audit
24and ending with the conclusion of the appeals process.
25    (h) An auditing entity must provide a copy to the plan
26sponsor of its claims that were included in the audit, and any



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1recouped money shall be returned to the plan sponsor, unless
2otherwise contractually agreed upon by the plan sponsor and
3the pharmacy benefit manager.
4    (i) The parameters of an audit must comply with
5manufacturer listings or recommendations, unless otherwise
6prescribed by the treating provider, and must be covered under
7the individual's health plan, for the following:
8        (1) the day supply for eyedrops must be calculated so
9    that the consumer pays only one 30-day copayment if the
10    bottle of eyedrops is intended by the manufacturer to be a
11    30-day supply;
12        (2) the day supply for insulin must be calculated so
13    that the highest dose prescribed is used to determine the
14    day supply and consumer copayment; and
15        (3) the day supply for topical product must be
16    determined by the judgment of the pharmacist or treating
17    provider upon the treated area.
18    (j) This Section shall not apply to:
19        (1) audits in which suspected fraud, waste, or abuse
20    or other intentional or willful misrepresentation is
21    evidenced by a physical review, review of claims data or
22    statements, or other investigative methods;
23        (2) audits of claims paid for by federally funded
24    programs; or
25        (3) concurrent reviews or desk audits that occur
26    within 3 business days after transmission of a claim and



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1    in which no chargeback or recoupment is demanded.