N.Y. Public Health Law § 280-c: Pharmacy audits by pharmacy benefit managers

§ 280-c. Pharmacy audits by pharmacy benefit managers. 1. Definitions.

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

pharmacy benefit manager for the provision of pharmacy services.

2. When conducting an audit of a pharmacy's records, a pharmacy

benefit 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)

electronically with electronic receipt confirmation, addressed to the

supervising pharmacist of record and pharmacy corporate office where

applicable, 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;

(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

benefit 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,

typographical 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

entity 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.