Senate Bill 1354 Summary

• Health benefit payers conducting pharmacy audits must identify audit procedures in pharmacy contracts, provide 2 weeks' written notice before initial on-site audits, and avoid scheduling audits during the first 5 calendar days of months, holidays, weekends, or Mondays without pharmacy consent.

• Audits involving clinical judgment must be conducted by or in consultation with a licensed pharmacist, and recoupments or payment adjustments must be reasonable and proportional to the error detected.

• Health benefit payers must deliver preliminary audit reports within 120 days of audit completion, allow pharmacies 60 days to respond with documentation, and deliver final reports within 6 months (or 6 months after appeal conclusion if appealed).

• Audits are limited to claims submitted within 2 years before audit initiation unless longer periods are permitted by law or documented patterns of payment error, inappropriate activity, or incomplete audits exist; payers cannot use extrapolation audits or receive payment based on risk-based auditing.

• An appeals process before a neutral party must be established by the Commissioner of Financial and Insurance Regulation using National Council for Prescription Drug Programs standards; clerical or record-keeping errors do not constitute fraud without proof of intent.