§1856.1. Pharmacy record audits; recoupment; appeals

A. As used in this Section, "entity" means a managed care company, insurance company, third-party payor, or the representative of the managed care company including a pharmacy benefit manager, insurance company, or third-party payor.

B. Notwithstanding any other provision of law to the contrary, when an onsite audit of the records of a pharmacy is conducted by an entity, the audit shall be conducted in accordance with the following criteria:

(1) The audit may not take place during the first five days of the month.

(2) No entity shall conduct an on-site audit at a particular pharmacy more than one time annually. However, the provisions of this Paragraph shall not apply when an entity must return to a pharmacy to complete an audit already in progress, or there is an identified history of errors, an identified activity which a reasonable man would believe to be inappropriate, or illegal activity that the entity has brought to the attention of the pharmacy owner or corporate headquarters of the pharmacy.

(3)(a) The entity or any vendor or subcontractor of the entity which conducts the initial onsite audit shall give the pharmacy notice at least two weeks before conducting the initial onsite audit for each audit cycle.

(b) If the audit, review, or investigation is initiated based on or involves alleged fraud or willful misrepresentation, notice before the initial on-site audit is not mandatory where it could impede the audit, review, or investigation.

(4)(a)(i) Any clerical or record-keeping error, such as a typographical error, scrivener's error, or computer error, regarding a required document or record shall not necessarily constitute fraud.

(ii) A claim arising pursuant to the provisions of this Section may be subject to recoupment.

(b) No claim arising pursuant to the provisions of this Section shall be subject to criminal penalties without proof of intent to commit fraud.

(5) A pharmacy may provide the records of a hospital, physician, or other authorized practitioner of the healing arts for drugs or medicinal supplies written or transmitted by any means of communication for purposes of supporting the pharmacy record with respect to orders or refills of a legend or narcotic drug.

(6) Each pharmacy shall be audited under the same standards and parameters as other similarly situated pharmacies audited by the entity.

(7)(a) The preliminary audit report shall be delivered to the pharmacy within ninety days after conclusion of the audit.

(b) A pharmacy shall be allowed at least thirty days following receipt of the preliminary audit report in which to initiate an appeal to address any discrepancy found during an on-site audit, as provided in Subsection E of this Section.

(c) A final audit report shall be delivered to the pharmacy within one hundred twenty days after receipt of the preliminary audit report or notice of appeal, whichever is later.

(d) Each entity conducting an audit shall make available a copy of the final audit report to the plan sponsor upon request or as otherwise required by contractual agreement.

(8) Any audit which involves clinical judgment shall be conducted by or in consultation with a licensed pharmacist.

(9) Interest on recoupment debts shall not accrue during the audit or appeal period.

(10) If the audit is conducted by a vendor or subcontractor of an entity, the vendor or subcontractor shall identify to the pharmacy the entity on whose behalf the audit is being conducted without necessity of this information being requested by the pharmacy.

(11) The audit shall be based only on information obtained by the entity conducting the audit and not based on any audit report or other information gained from an audit conducted by a different auditing entity. Nothing in this Paragraph shall prohibit an auditing entity from using an earlier audit report prepared by that auditing entity for the same pharmacy. Except as required by state or federal law, an entity conducting an audit may have access to a pharmacy's previous audit report only if the previous report was prepared by that entity.

C.(1) Recoupment of any disputed funds, or repayment of funds to the entity by the pharmacy if permitted pursuant to contractual agreement, shall occur after final disposition of the audit, including the appeals process. Recoupment shall not be based on documentation requirements in addition to or exceeding requirements for creating or maintaining documentation prescribed by the Louisiana Board of Pharmacy; or on a requirement that a pharmacy or pharmacist perform a professional duty in addition to or exceeding professional duties prescribed by the Louisiana Board of Pharmacy.

(2) The provisions of this Section shall not apply in cases of United States Food and Drug Administration regulation or manufacturer safety programs.

(3)(a) The full amount of any recoupment on an audit shall be refunded to the responsible party.

(b) Except as provided in this Subsection, a charge or assessment for an audit shall not be based, directly or indirectly, on amounts recouped.

(c) Nothing in this Subsection shall be construed to prevent the entity conducting the audit from charging or assessing the responsible party, directly or indirectly, based on amounts recouped if both of the following conditions are met:

(i) The responsible party and the entity have a contract that explicitly states the percentage charge or assessment to the responsible party.

(ii) A commission or other payment to an agent or employee of the entity conducting the audit is not based, directly or indirectly, on amounts recouped.

(4) Before recoupment of funds may be made based on an audit finding overpayment or underpayment, a final audit report shall be distributed.

D.(1) No pharmacy shall be subject to recoupment of any portion of the reimbursement for the dispensed product of a prescription unless one or more of the following has occurred:

(a) The pharmacy has engaged in fraudulent activity or other intentional and willful misrepresentation, as evidenced by a review of claims data or statements, physical review, or any other investigative method.

(b) The pharmacy has engaged in dispensing in excess of the benefit design, as established by the plan sponsor.

(c) The pharmacy has not filled prescriptions in accordance with the prescriber's order.

(d) The pharmacy has received an actual overpayment.

(2) Recoupment of claims shall be based on the actual financial harm to the entity or on the actual overpayment or underpayment. A finding of an overpayment that is the result of dispensing in excess of the benefit design, as established by the plan sponsor, shall be calculated as the difference between what was dispensed in accordance with the prescriber's orders and the dispensing requirements as set forth by the benefit design. Calculations of overpayments shall not include dispensing fees unless one or more of the following conditions has been satisfied:

(a) A prescription was not actually dispensed.

(b) The prescriber denied authorization.

(c) The prescription dispensed was a medication error by the pharmacy.

(d) The identified overpayment is based solely on an extra dispensing fee.

(e) The pharmacy was noncompliant with program guidelines.

(f) There was insufficient documentation.

E.(1) Each entity conducting an audit shall establish an appeal process under which a pharmacy may appeal an unfavorable preliminary audit report to the entity.

(2) If, following an appeal, the entity finds that an unfavorable audit report or any portion of an unfavorable audit report is unsubstantiated, the entity shall dismiss the audit report or the unsubstantiated portion of the audit report without any further proceedings.

(3) No interest shall be charged to the entity during the appeal period.

(4) Following the final audit report, and if not otherwise provided for in the provider contract, either party may seek mediation to address outstanding disagreements.

(5) Notwithstanding any other provision of law to the contrary, the agency conducting the audit shall not use the accounting practice of extrapolation in calculating recoupment or penalties for audits, unless otherwise agreed to by the pharmacy or mandated by a government agency or in the case of fraud.

F. Unless otherwise provided for in the network agreement, pharmacies or payors may seek mediation to resolve contractual disputes related to pricing or on-site audits.

G. This Section shall not apply to:

(1) Any quality assurance review, as defined by the time period prior to the reimbursement by the entity to the pharmacy.

(2) An investigation that is initiated based on or that involves suspected or alleged fraud, willful misrepresentation, or abuse.

(3) Any federally funded activity specifically preempted by law or rule.

(4) Any audit conducted pursuant to the participation of a pharmacy in the Louisiana Medicaid Program.

Acts 2012, No. 856, §1; Acts 2014, No. 502, §1, eff. June 5, 2014.

NOTE: See Acts 2012, No. 856, §3, relative to applicability.