Full Text of HB2017 97th General Assembly
HB2017 97TH GENERAL ASSEMBLY |
| | 97TH GENERAL ASSEMBLY
State of Illinois
2011 and 2012 HB2017 Introduced , by Rep. Franco Coladipietro SYNOPSIS AS INTRODUCED: |
| 215 ILCS 5/512-3 | from Ch. 73, par. 1065.59-3 | 215 ILCS 5/512-7 | from Ch. 73, par. 1065.59-7 |
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Amends the Illinois Insurance Code. Makes changes in the provision concerning definitions. Provides that when an on-site audit or a desk audit of the records of a pharmacy is conducted by any entity, the audit shall be conducted in accordance with certain criteria. Provides that the auditing entity, administrator, or its representative must provide the pharmacy with a written report of the audit and comply with certain requirements. Sets forth provisions concerning appeals processes, accounting practices, and applicability.
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| | A BILL FOR |
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| 1 | | AN ACT concerning insurance.
| 2 | | Be it enacted by the People of the State of Illinois,
| 3 | | represented in the General Assembly:
| 4 | | Section 5. The Illinois Insurance Code is amended by | 5 | | changing Sections 512-3 and 512-7 as follows:
| 6 | | (215 ILCS 5/512-3) (from Ch. 73, par. 1065.59-3)
| 7 | | Sec. 512-3. Definitions. For the purposes of this Article, | 8 | | unless the
context otherwise requires, the terms defined in | 9 | | this Article have the meanings
ascribed
to them herein:
| 10 | | (a) "Third party prescription program" or "program" means | 11 | | any system of
providing for the reimbursement of pharmaceutical | 12 | | services and prescription
drug products offered or operated in | 13 | | this State under a contractual arrangement
or agreement between | 14 | | a provider of such services and another party who is
not the | 15 | | consumer of those services and products. Such programs may | 16 | | include, but need not be limited to, employee benefit
plans | 17 | | whereby a consumer receives prescription drugs or other | 18 | | pharmaceutical
services and those services are paid for by
an | 19 | | agent of the employer or others.
| 20 | | (b) "Third party program administrator" or "administrator" | 21 | | or "entity" means any pharmacy benefits manager or person, | 22 | | business, or other entity that performs pharmacy benefits | 23 | | management. The terms include a person or auditing entity |
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| 1 | | acting for a pharmacy benefits manager in a contractual or | 2 | | employment relationship in the performance of pharmacy | 3 | | benefits management for a managed care company or nonprofit | 4 | | hospital or the services of a pharmacy benefits administrator, | 5 | | medical service organization, insurance company, third-party | 6 | | payor, person,
partnership or corporation who issues or causes | 7 | | to be issued any payment
or reimbursement to a provider for | 8 | | services rendered pursuant to a third
party prescription | 9 | | program, but does not include the Director of Healthcare and | 10 | | Family Services or any agent authorized by
the Director to | 11 | | reimburse a provider of services rendered pursuant to a
program | 12 | | of which the Department of Healthcare and Family Services is | 13 | | the third party.
| 14 | | (Source: P.A. 95-331, eff. 8-21-07.)
| 15 | | (215 ILCS 5/512-7) (from Ch. 73, par. 1065.59-7)
| 16 | | Sec. 512-7. Contractual provisions.
| 17 | | (a) Any agreement or contract entered into in this State | 18 | | between the
administrator of a program and a pharmacy shall | 19 | | include a statement of the
method and amount of reimbursement | 20 | | to the pharmacy for services rendered to
persons enrolled in | 21 | | the program, the frequency of payment by the program
| 22 | | administrator to the pharmacy for those services, and a method | 23 | | for the
adjudication of complaints and the settlement of | 24 | | disputes between the
contracting parties.
| 25 | | (b)(1) A program shall provide an annual period of at least |
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| 1 | | 30 days
during which any pharmacy licensed under the | 2 | | Pharmacy Practice Act
may elect to participate in the | 3 | | program under the program terms for at
least one year.
| 4 | | (2) If compliance with the requirements of this | 5 | | subsection (b) would
impair any provision of a contract | 6 | | between a program and any other person,
and if the contract | 7 | | provision was in existence before January 1, 1990,
then | 8 | | immediately after the expiration of those contract | 9 | | provisions the
program shall comply with the requirements | 10 | | of this subsection (b).
| 11 | | (3) This subsection (b) does not apply if:
| 12 | | (A) the program administrator is a licensed health | 13 | | maintenance
organization that owns or controls a | 14 | | pharmacy and that enters into an
agreement or contract | 15 | | with that pharmacy in accordance with subsection (a); | 16 | | or
| 17 | | (B) the program administrator is a licensed health | 18 | | maintenance
organization that is owned or controlled | 19 | | by another entity that also owns
or controls a | 20 | | pharmacy, and the administrator enters into an | 21 | | agreement or
contract with that pharmacy in accordance | 22 | | with subsection (a).
| 23 | | (4) This subsection (b) shall be inoperative after | 24 | | October 31,
1992.
| 25 | | (c) The program administrator shall cause to be issued an | 26 | | identification
card to each person enrolled in the program. The |
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| 1 | | identification card
shall include:
| 2 | | (1) the name of the individual enrolled in the program; | 3 | | and
| 4 | | (2) an expiration date if required under the | 5 | | contractual arrangement or
agreement between a provider of | 6 | | pharmaceutical services and prescription
drug products and | 7 | | the third party prescription program administrator.
| 8 | | (d) Notwithstanding any other law, when an on-site audit or | 9 | | a desk audit of the records of a pharmacy is conducted by any | 10 | | entity, the audit shall be conducted in accordance with the | 11 | | following criteria: | 12 | | (1) no entity shall conduct an on-site audit or a desk | 13 | | audit at a particular pharmacy more than once annually; | 14 | | however, this paragraph (1) shall not apply when an entity | 15 | | must return to a pharmacy to complete an audit already in | 16 | | progress, there is suspected or previously identified | 17 | | history of errors, or inappropriate or illegal activity | 18 | | that the entity has brought to the attention of the | 19 | | pharmacy owner or corporate headquarters of the pharmacy; | 20 | | (2) the entity conducting the on-site audit or desk | 21 | | audit must give the pharmacy written notice, delivered by | 22 | | certified mail to the owner of the pharmacy, at least 2 | 23 | | weeks prior to conducting the initial on-site audit for | 24 | | each audit cycle and must describe in exact detail the | 25 | | records to be examined; | 26 | | (3) the entity conducting the on-site audit or desk |
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| 1 | | audit shall not exceed 4 hours in duration and shall not | 2 | | interfere with the delivery of pharmacist services to any | 3 | | patient, and shall utilize every effort to minimize | 4 | | inconvenience and disruption to pharmacy operations during | 5 | | the audit process; on-site audits shall review no more than | 6 | | 100 unique prescription numbers during an initial audit; | 7 | | (4) any audit that involves clinical or professional | 8 | | judgment must be conducted by or in consultation with a | 9 | | pharmacist licensed in this State; | 10 | | (5) any clerical or record-keeping error, such as a | 11 | | typographical error, scrivener's error, or computer error, | 12 | | regarding a required document or record does not constitute | 13 | | fraud; however, such claims may be subject to recoupment; | 14 | | (6) a pharmacy may use the records of a hospital, | 15 | | physician, or other authorized practitioner of the healing | 16 | | arts for drugs or medicinal supplies written or transmitted | 17 | | by any means of communication for purposes of validating | 18 | | the pharmacy record with respect to orders or refills of a | 19 | | legend or narcotic drug; | 20 | | (7) a finding of an overpayment or underpayment must be | 21 | | based on the actual overpayment or underpayment and may not | 22 | | be a projection based on the number of patients served | 23 | | having a similar diagnosis or on the number of similar | 24 | | orders or refills for similar drugs; | 25 | | (8) a finding of overpayment to the pharmacy shall | 26 | | invoke a recoupment of dispensing fees only, such as the |
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| 1 | | medications were legally dispensed and received by a valid | 2 | | patient under order of a valid prescription and previously | 3 | | authorized for payment by the entity; | 4 | | (9) each pharmacy shall be audited under the same | 5 | | standards, parameters, and frequency as other similarly | 6 | | situated pharmacies audited by the entity; | 7 | | (10) the period covered by an audit may not exceed one | 8 | | year from the date the claim was submitted to or | 9 | | adjudicated by a managed care company, nonprofit hospital | 10 | | or medical service organization, insurance company, | 11 | | third-party payor, pharmacy benefit manager, health | 12 | | program administered by a department of the State, or any | 13 | | entity that represents such companies, groups, or | 14 | | departments; | 15 | | (11) no audit may be initiated or scheduled during the | 16 | | first 7 calendar days of any month, or during peak holiday | 17 | | seasons, due to the high volume of prescriptions filled in | 18 | | the pharmacy during that time unless otherwise consented to | 19 | | by the pharmacy; | 20 | | (12) the firm or entity conducting the on-site audit or | 21 | | desk audit on behalf of the plan provider or pharmacy | 22 | | benefits manager may not receive compensation payments | 23 | | based on a formula calculated on the amount recovered; | 24 | | (13) any necessary or legally required information may | 25 | | appear on the front or back or affixed to the prescription | 26 | | to be deemed legally valid, along with any accepted |
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| 1 | | electronic records to the extent permitted by law; and | 2 | | (14) when a valid prescription is in force, auditors | 3 | | may not seek recoupment for claims that exceeded face value | 4 | | of prescription or similar claims when a duly authorized | 5 | | prescription is in force and permitted under law. | 6 | | (e) The auditing entity, administrator, or its | 7 | | representative described in subsection (d) of this Section must | 8 | | provide the pharmacy with a written report of the audit and | 9 | | comply with the following requirements: | 10 | | (1) the preliminary audit report must be delivered to | 11 | | the pharmacy within 90 days after conclusion of the audit | 12 | | along with a written copy of the formal appeals process to | 13 | | each pharmacy that is being audited; | 14 | | (2) a pharmacy shall be allowed at least 60 days | 15 | | following receipt of the preliminary audit report in which | 16 | | to produce documentation to address any discrepancy found | 17 | | during the audit; | 18 | | (3) a final audit report shall be delivered to the | 19 | | pharmacy within 120 days after receipt of the preliminary | 20 | | audit report or final appeal, as provided for in Section 6 | 21 | | of this Code, whichever is later; | 22 | | (4) the audit report must be signed and shall include | 23 | | the signature of any pharmacist participating in the audit; | 24 | | (5) any recoupments of disputed funds shall only occur | 25 | | after final internal disposition of the audit, including | 26 | | the appeals process as set forth in Section 6 of this Code; |
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| 1 | | (6) interest shall not accrue during the audit period; | 2 | | (7) each administrator or its representative | 3 | | conducting an audit shall provide a copy of the final audit | 4 | | report, after completion of any review process, to the both | 5 | | the pharmacy and the plan sponsor; and | 6 | | (8) the auditing entity shall conduct an exit interview | 7 | | at the close of the audit, at a time agreed to by the | 8 | | pharmacy, which shall provide the following: (i) response | 9 | | to questions from the auditing entity; (ii) review and | 10 | | comment on the initial finding of the auditing entity; and | 11 | | (iii) additional documentation to clarify the initial | 12 | | findings of the auditing entity. | 13 | | (f) Appeal processes pursuant to this Section shall comport | 14 | | with the following provisions: | 15 | | (1) The National Council for Prescription Drug | 16 | | Programs or any other recognized national industry | 17 | | standard shall be used to evaluate claims submission or | 18 | | product size disputes. | 19 | | (2) Each administrator or its representative | 20 | | conducting an audit shall establish a written appeals | 21 | | process under which a pharmacy may appeal an unfavorable | 22 | | preliminary audit report to the administrator. | 23 | | (3) If, following the appeal, the administrator finds | 24 | | that an unfavorable audit report or any portion thereof is | 25 | | unsubstantiated, then the administrator shall dismiss the | 26 | | audit report or said portion without the necessity of any |
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| 1 | | further action. | 2 | | (g) Notwithstanding any other provision in this Code, the | 3 | | administrator conducting the audit pursuant to subsections (d) | 4 | | and (e) of this Section shall not use the accounting practice | 5 | | of extrapolation in calculating recoupments or penalties for | 6 | | audits. | 7 | | As used in this Section, "accounting practice of | 8 | | extrapolation" means an audit of a sample of prescription drug | 9 | | benefit claims submitted by a pharmacy to the administrator | 10 | | conducting the audit that is then used to estimate audit | 11 | | results for a larger batch or group of claims not reviewed by | 12 | | the auditor. | 13 | | (h) The audit criteria set forth in this Section shall | 14 | | apply only to audits of claims for services provided and claims | 15 | | submitted for payment after the effective date of this | 16 | | amendatory Act of the 97th General Assembly and all criteria of | 17 | | the audit standards must be set forth in law and criteria more | 18 | | restrictive than Illinois law shall not be permitted nor used | 19 | | as principles of audit. | 20 | | (i) This Section shall not apply to any investigative audit | 21 | | conducted by or on behalf of a State agency that involves | 22 | | fraud, willful misrepresentation, or abuse, including, without | 23 | | limitation, investigative audits or any other statutory | 24 | | provision that authorizes investigations relating to insurance | 25 | | fraud. | 26 | | (Source: P.A. 95-689, eff. 10-29-07.)
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