Bill Summary – FastDemocracy

SECOND REGULAR SESSION
                        HOUSE BILL NO. 1850
                               103RD GENERAL ASSEMBLY


                               INTRODUCED BY REPRESENTATIVE HEWKIN.

     5331H.01I                                                                    JOSEPH ENGLER, Chief Clerk


                                                AN ACT
     To repeal sections 338.600, 376.387, and 376.388, RSMo, and to enact in lieu thereof four
            new sections relating to pharmacies.


     Be it enacted by the General Assembly of the state of Missouri, as follows:

            Section A. Sections 338.600, 376.387, and 376.388, RSMo, are repealed and four
 new sections enacted in lieu thereof, to be known as sections 338.600, 338.840, 376.387, and
 376.388, to read as follows:
            338.600. 1. As used in this section, the following terms mean:
        (1) "Audit", any review, inspection, or analysis conducted by an entity of a
 pharmacy's records, practices, or compliance with contractual obligations;
        (2) "Entity":
        (a) Any managed care company, insurance company, or third-party payer or a
 representative of a managed care company, insurance company, or third-party payer;
 or
        (b) Any pharmacy benefits manager or subcontractor of a pharmacy benefits
 manager or a representative of a pharmacy benefits manager or subcontractor of a
 pharmacy benefits manager;
        (3) "Pharmacy benefits manager", the same meaning given to the term in section
 376.387.
        2. Notwithstanding any other provision of law to the contrary, when an audit of the
 records of a pharmacy licensed in this state is conducted by [a managed care company,
 insurance company, third-party payor, or] any entity [that represents such companies or
 groups], such audit shall be conducted in accordance with the following:

     EXPLANATION — Matter enclosed in bold-faced brackets [thus] in the above bill is not enacted and is
     intended to be omitted from the law. Matter in bold-face type in the above bill is proposed language.
HB 1850                                             2

         (1) The entity conducting the initial on-site audit shall provide the pharmacy with
 notice at least [one week] fourteen days prior to conducting the initial on-site audit for each
 audit cycle and identify specific prescriptions to be audited. If the entity identifies the
 prescriptions to be audited by providing prescription numbers, the entity may omit the
 final two digits of the prescription numbers;
         (2) Any audit which involves clinical judgment shall be conducted by or in
 consultation with a [licensed] pharmacist licensed by the board of pharmacy who shall be
 made available to the audited pharmacy to discuss clinical rationale;
         (3) Any clerical error, record-keeping error, typographical error, or scrivener's error
 regarding a required document or record shall not constitute fraud or grounds for recoupment,
 so long as the prescription was otherwise legally dispensed and the claim was otherwise
 materially correct; except that, such claims may be otherwise subject to recoupment of
 overpayments or payment of any discovered underpayment. No claim arising under this
 subdivision shall be subject to criminal penalties without proof of intent to commit fraud.
 The pharmacy shall have the right to submit amended claims within thirty days of the
 discovery of an error to correct clerical or record-keeping errors in lieu of recoupment if
 the prescription was dispensed according to requirements set forth in state or federal
 law;
         (4) A pharmacy may use the records of a hospital, physician, or other authorized
 practitioner of the healing arts involving drugs or medicinal supplies written or transmitted by
 any means of communication for purposes of validating the pharmacy record with respect to
 orders or refills of a legend or narcotic drug. Electronically stored images of prescriptions,
 electronically created annotations and other related supporting documentation shall be
 considered valid prescription records. Hard copy and electronic signature logs that indicate
 the delivery of pharmacy services shall be considered valid proof of receipt of such services
 by a program enrollee;
         (5) A finding of an overpayment or underpayment may be a projection based on the
 number of patients served and having a similar diagnosis or on the number of similar orders
 or refills for similar drugs; except that, recoupment of claims shall be based on the actual
 overpayment or underpayment unless the projection for overpayment or underpayment is part
 of a settlement as agreed to by the pharmacy;
         (6) Each pharmacy shall be audited under the same standards and parameters as other
 pharmacies audited by the entity;
         (7) A pharmacy shall be allowed at least thirty days following receipt of the
 preliminary audit report in which to produce documentation to address any discrepancy found
 during an audit;
HB 1850                                              3

         (8) An audit shall be limited to twenty-five prescriptions that have been
 randomly selected from a pool of prescriptions of a similar type as the prescriptions that
 are collectively adjudicated. If an audit reveals the necessity for a review of additional
 claims, the audit shall be conducted on site;
         (9) An entity shall not initiate an audit of a pharmacy more than two times in a
 calendar year. Any prescription information request by an entity that could result in
 recoupment shall count as an audit under this subdivision;
         (10) A recoupment shall not be based on:
         (a) Documentation requirements in addition to or exceeding requirements for
 creating or maintaining documentation prescribed by the board of pharmacy; or
         (b) A requirement that a pharmacy or pharmacist perform a professional duty
 in addition to or exceeding professional duties prescribed by the board of pharmacy;
         (11) Recoupment shall occur only following the correction of a claim and shall be
 limited to amounts adjudicated by the pharmacy benefits manager;
         (12) Except for Medicare claims, approval of drug, prescriber, or patient
 eligibility upon adjudication of a claim shall not be reversed unless the pharmacy or
 pharmacist obtained the adjudication by fraud or misrepresentation of claim elements;
         (13) Any entity conducting an audit shall not be compensated, nor shall any of its
 employees be compensated, directly or indirectly, based on any amounts recouped;
         (14) An entity shall not charge a fee for conducting an on-site audit or a desk
 audit unless there is a finding of actual fraud;
         (15) The period covered by the audit shall not exceed a two-year period beginning
 [two years prior to the initial date of the on-site portion of the audit unless otherwise provided
 by contractual agreement or if] on the date a claim being audited was submitted for
 payment unless there has been a previous finding of fraud or as otherwise provided by state
 or federal law;
         [(9)] (16) An audit shall not be initiated or scheduled during the first [three] five
 business days of any month due to the high volume of prescriptions filled during such time
 unless otherwise consented to by the pharmacy;
         [(10)] (17) The preliminary audit report shall be delivered to the pharmacy within one
 hundred twenty days after conclusion of the audit, with reasonable extensions permitted. A
 final audit report shall be delivered to the pharmacy within six months of receipt by the
 pharmacy of the preliminary audit report or final appeal, as provided for in subsection [3] 4 of
 this section, whichever is later. If an audit report is not delivered to the pharmacy within
 the time frame required under this subdivision, the audit shall be deemed free of
 discrepancies, and no recoupment shall be permitted;
 HB 1850                                            4

         [(11)] (18) The days' supply for unit-of-use items, such as topicals, drops, vials,
 and inhalants, shall not be limited beyond manufacturer recommendations;
         (19) If the only commercially available package size exceeds an entity's
 maximum days' supply, the dispensing of such package size shall be accepted by the
 entity and shall not be the basis for recoupment;
         (20) If the only commercially available package size exceeds an entity's
 maximum days' supply and the entity accepts the refill of such prescription, the entity
 shall not recoup such claim as an early refill;
         (21) The failure of a pharmacy to collect a co-payment shall not be the basis for
 recoupment if the pharmacy provides documentation of billing of the claim and a
 reasonable attempt to collect the co-payment;
         (22) An entity conducting a wholesale invoice audit shall comply with the
 following provisions:
         (a) The entity shall not audit the claims of another entity;
         (b) The following shall not form the basis for recoupment:
         a. The National Drug Code for the dispensed drug is in a quantity that is a
 subunit or multiple of the purchased drug as reflected on a supporting wholesale
 invoice;
         b. The correct quantity dispensed is reflected on the audited pharmacy claim; or
         c. The drug dispensed by the pharmacy on an audited pharmacy claim is
 identical to the strength and dosage form of the drug purchased;
         (c) The entity shall accept as evidence:
         a. Supplier invoices issued prior to the date of dispensing the drug underlying
 the audited claim;
         b. Invoices from any supplier authorized by law to transfer ownership of the
 drug acquired by the audited pharmacy;
         c. Copies of supplier invoices in the possession of the audited pharmacy; and
         d. Reports required by any state board or agency; and
         (d) Within five business days of any request by the audited pharmacy, the entity
 shall provide supporting documentation provided to the entity by the audited
 pharmacy's suppliers; and
         (23) Notwithstanding any other provision in this subsection, the entity conducting the
 audit shall not use the accounting practice of extrapolation in calculating recoupments or
 penalties for audits, except as otherwise authorized under subdivision (5) of this subsection.
         [2.] 3. Recoupments of any disputed moneys shall only occur after final internal
 disposition of the audit, including the appeals process set forth in subsection [3] 4 of this
 section. Should the identified discrepancy for an individual audit exceed twenty-five
 HB 1850                                             5

 thousand dollars, future payments to the pharmacy in excess of twenty-five thousand dollars
 may be withheld pending finalization of the audit.
         [3.] 4. Each entity conducting an audit shall establish an appeals process, lasting no
 longer than six months, under which a licensed pharmacy may appeal an unfavorable
 preliminary audit report to the entity. If, following such appeal, the entity finds that an
 unfavorable audit report or any portion thereof is unsubstantiated, the entity shall dismiss the
 audit report or such portion without the necessity of any further proceedings.
         [4.] 5. Each entity conducting an audit shall provide a copy of the final audit report,
 after completion of any appeal process, to the plan sponsor. If any recoupment occurred,
 the report shall include the total amount of recoupment returned to the plan sponsor.
         [5.] 6. This section shall not apply to any investigative audit that involves probable
 fraud, willful misrepresentation, or abuse.
         [6.] 7. This section shall not apply to any audit conducted as part of any inspection or
 investigation conducted by any governmental entity or law enforcement agency.
              338.840. The department of health and senior services shall establish a critical
 access care pharmacy program to ensure the sustainability of critical access care
 pharmacies throughout this state. The program shall assist pharmacies identified as
 critical access care pharmacies based on their location in an area where pharmacy
 services are needed.
              376.387. 1. For purposes of this section, the following terms shall mean:
         (1) "Covered person", [the same meaning as such term is defined in section 376.1257]
 a policyholder, subscriber, enrollee, or other individual whose prescription drug
 coverage is administered through a pharmacy benefits manager or a health benefit plan;
         (2) "Health benefit plan", the same meaning as such term is defined in section
 376.1350;
         (3) "Health carrier" or "carrier", the same meaning as such term is defined in section
 376.1350;
         (4) "Pharmacy", the same meaning as such term is defined in chapter 338;
         (5) "Pharmacy benefits manager", the same meaning as such term is defined in
 section 376.388.
         2. No pharmacy benefits manager shall include a provision in a contract entered into
 or modified on or after August 28, 2018, with a pharmacy or pharmacist that requires a
 covered person to make a payment for a prescription drug at the point of sale in an amount
 that exceeds the lesser of:
         (1) The copayment amount as required under the health benefit plan; or
         (2) The amount an individual would pay for a prescription if that individual paid with
 cash.
HB 1850                                              6

          3. A pharmacy or pharmacist shall have the right to provide to a covered person
 information regarding the amount of the covered person's cost share for a prescription drug,
 the covered person's cost of an alternative drug, and the covered person's cost of the drug
 without adjudicating the claim through the pharmacy benefits manager. Neither a pharmacy
 nor a pharmacist shall be proscribed by a pharmacy benefits manager from discussing any
 such information or from selling a more affordable alternative to the covered person.
          4. No pharmacy benefits manager shall, directly or indirectly, charge or hold a
 pharmacist or pharmacy responsible for any fee amount related to a claim that is not known at
 the time of the claim's adjudication, unless the amount is a result of improperly paid claims or
 charges for administering a health benefit plan.
          5. This section shall not apply with respect to claims under Medicare Part D, or any
 other plan administered or regulated solely under federal law, and to the extent this section
 may be preempted under the Employee Retirement Income Security Act of 1974 for self-
 funded employer-sponsored health benefit plans.
          6. A pharmacy benefits manager shall notify in writing any health carrier with which
 it contracts if the pharmacy benefits manager has a conflict of interest, any commonality of
 ownership, or any other relationship, financial or otherwise, between the pharmacy benefits
 manager and any other health carrier with which the pharmacy benefits manager contracts.
          7. The department of commerce and insurance shall enforce this section and may
 audit any information provided by a pharmacy benefits manager under this section.
              376.388. 1. As used in this section, unless the context requires otherwise, the
 following terms shall mean:
          (1) "Contracted pharmacy" [or "pharmacy"], a pharmacy located in Missouri
 participating in the network of a pharmacy benefits manager through a direct or indirect
 contract;
          (2) ["Health carrier", an entity subject to the insurance laws and regulations of this
 state that contracts or offers to contract to provide, deliver, arrange for, pay for, or reimburse
 any of the costs of health care services, including a sickness and accident insurance company,
 a health maintenance organization, a nonprofit hospital and health service corporation, or any
 other entity providing a plan of health insurance, health benefits, or health services, except
 that such plan shall not include any coverage pursuant to a liability insurance policy, workers'
 compensation insurance policy, or medical payments insurance issued as a supplement to a
 liability policy] "Health benefit plan", the same meaning given to the term in section
 376.1350;
          (3) "Maximum allowable cost", the per-unit amount that a pharmacy benefits
 manager reimburses a pharmacist for a prescription drug, excluding a dispensing or
 professional fee;
HB 1850                                            7

         (4) "Maximum allowable cost list" or "MAC list", a listing of drug products that meet
 the standard described in this section;
         (5) "Pharmacy", as such term is defined in chapter 338;
         (6) "Pharmacy benefits manager", an entity that contracts with pharmacies on behalf
 of health carriers [or any health plan sponsored by the state or a political subdivision of the
 state] or health benefit plans to provide prescription drug and pharmacist services;
         (7) "Pharmacy benefits manager affiliate" or "affiliate", a pharmacy or
 pharmacist that directly or indirectly, through one or more intermediaries, owns or
 controls, is owned or controlled by, or is under common ownership or control with a
 pharmacy benefits manager;
         (8) "Pharmacy benefits manager rebate aggregator", any entity that negotiates
 with a pharmaceutical manufacturer on behalf of a pharmacy benefits manager for a
 rebate;
         (9) "Pharmacy claims data", information regarding a prescription transaction
 that is adjudicated by a pharmacy benefits manager for a covered person, as defined in
 section 376.387, between the pharmacy and the pharmacy benefits manager and
 between the pharmacy benefits manager and the plan sponsor, which shall include, at a
 minimum:
         (a) The prescription drug's National Drug Code;
         (b) The contracted compensation rate to the plan sponsor for each drug;
         (c) The amount paid to the pharmacy for each unit;
         (d) The channel of dispensing, whether by retail, mail-order, or specialty
 pharmacy;
         (e) For brand-name drugs, the wholesale acquisition cost per unit;
         (f) For generic drugs, the average wholesale price per unit;
         (g) The number of claims, participants, dosage units dispensed, and days'
 supply;
         (h) The net price of the drug after accounting for all rebates, including from
 pharmacy benefits manager rebate aggregators, discounts, and fees;
         (i) The total out-of-pocket cost paid by the participant per claim; and
         (j) All amounts received by the plan sponsor, the pharmacy benefits manager, or
 any affiliate including, but not limited to, co-payment assistance, co-payment cards, or
 remuneration provided by pharmaceutical ma