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1 | AN ACT concerning regulation.
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2 | Be it enacted by the People of the State of Illinois,
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3 | represented in the General Assembly:
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4 | Section 5. The Illinois Insurance Code is amended by | ||||||||||||||||||||||||
5 | changing Section 512-3 and by adding Sections 512-11, 512-12, | ||||||||||||||||||||||||
6 | and 512-13 as follows:
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7 | (215 ILCS 5/512-3) (from Ch. 73, par. 1065.59-3)
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8 | Sec. 512-3. Definitions. For the purposes of this Article, | ||||||||||||||||||||||||
9 | unless the
context otherwise requires, the terms defined in | ||||||||||||||||||||||||
10 | this Article have the meanings
ascribed
to them herein:
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11 | "Audit" means an audit that is conducted by an auditing | ||||||||||||||||||||||||
12 | entity either (i) at a location other than the location of the | ||||||||||||||||||||||||
13 | pharmacist or pharmacy, including an audit that is performed at | ||||||||||||||||||||||||
14 | the offices of the auditing entity during which the pharmacist | ||||||||||||||||||||||||
15 | or pharmacy provides requested documents for review by physical | ||||||||||||||||||||||||
16 | copy or by microfiche, disk, or other electronic media; or (ii) | ||||||||||||||||||||||||
17 | at the physical business address of the pharmacy where the | ||||||||||||||||||||||||
18 | claim was adjudicated. | ||||||||||||||||||||||||
19 | "Auditing entity" means a person or company that performs a | ||||||||||||||||||||||||
20 | pharmacy audit, including a plan sponsor, covered entity, | ||||||||||||||||||||||||
21 | pharmacy benefits manager, managed care organization, or third | ||||||||||||||||||||||||
22 | party administrator. | ||||||||||||||||||||||||
23 | "Business day" means any day of the week, excluding |
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1 | Saturday, Sunday, and any legal holiday. | ||||||
2 | "Concurrent review" means a review of a prescription claim | ||||||
3 | that occurs at the time of, or subsequent to the adjudication | ||||||
4 | of, the claim that provides information to the pharmacy that is | ||||||
5 | relevant to the claim, including, but not limited to, mandatory | ||||||
6 | or optional edits to the claim. | ||||||
7 | "Covered entity" means a member, participant, enrollee, | ||||||
8 | contract holder, or policy holder providing pharmacy benefits | ||||||
9 | to a covered individual under a health coverage plan insurance | ||||||
10 | policy pursuant to a contract administered by a pharmacy | ||||||
11 | benefits manager. | ||||||
12 | "Covered individual" means a member, participant, | ||||||
13 | enrollee, contract holder or policy holder, or beneficiary of a | ||||||
14 | covered entity who is provided health coverage by the covered | ||||||
15 | entity. The term includes a dependent or other person provided | ||||||
16 | health coverage through the policy or contract of a covered | ||||||
17 | individual. | ||||||
18 | "Department" means the Department of Insurance. | ||||||
19 | "Extrapolation" means the practice of inferring a | ||||||
20 | frequency of dollar amount of overpayments, underpayments, | ||||||
21 | invalid claims, or other errors on any portion of claims | ||||||
22 | submitted, based on the frequency of dollar amount of | ||||||
23 | overpayments, underpayments, invalid claims, or other errors | ||||||
24 | actually measured in a sample of claims. | ||||||
25 | "Network" means a pharmacy or group of pharmacies that | ||||||
26 | agree to provide prescription services to covered individuals |
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1 | on behalf of a covered entity or group of covered entities in | ||||||
2 | exchange for payment for its services by a pharmacy benefits | ||||||
3 | manager or pharmacy services administration organization. | ||||||
4 | "Network" includes a pharmacy that generally dispenses | ||||||
5 | outpatient prescriptions to covered individuals or dispenses | ||||||
6 | particular types of prescriptions, provides pharmacy services | ||||||
7 | to particular types of covered individuals, or dispenses | ||||||
8 | prescriptions in particular health care settings, including | ||||||
9 | networks of specialty, institutional, or long-term care | ||||||
10 | facilities. | ||||||
11 | "Pharmacist" has the meaning ascribed to that term in the | ||||||
12 | Pharmacy Practice Act. | ||||||
13 | "Pharmacy" has the meaning ascribed to that term in the | ||||||
14 | Pharmacy Practice Act. | ||||||
15 | "Pharmacy audit" means an audit, conducted on-site by or on | ||||||
16 | behalf of an auditing entity, of any records of a pharmacy for | ||||||
17 | prescription or nonproprietary drugs dispensed by a pharmacy to | ||||||
18 | a covered individual. | ||||||
19 | "Pharmacy benefits manager" or "PBM" means a person, | ||||||
20 | business, or other entity that performs pharmacy benefits | ||||||
21 | management for covered entities. | ||||||
22 | "Pharmacy record" means any record stored electronically | ||||||
23 | or as a physical copy by a pharmacy that relates to the | ||||||
24 | provision of prescription or nonproprietary drugs or pharmacy | ||||||
25 | services or other component of pharmacist care that is included | ||||||
26 | in the practice of pharmacy. |
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1 | "Pharmacy services administration organization" means any | ||||||
2 | entity that contracts with a pharmacy to assist with third | ||||||
3 | party payer interactions and that may provide a variety of | ||||||
4 | other administrative services, including contracting with PBMs | ||||||
5 | on behalf of pharmacies and managing pharmacies' claims | ||||||
6 | payments from third party payers. | ||||||
7 | (a) "Third party prescription program" or "program" means | ||||||
8 | any system of
providing for the reimbursement of pharmaceutical | ||||||
9 | services and prescription
drug products offered or operated in | ||||||
10 | this State under a contractual arrangement
or agreement between | ||||||
11 | a provider of such services and another party who is
not the | ||||||
12 | consumer of those services and products. Such programs may | ||||||
13 | include, but need not be limited to, employee benefit
plans | ||||||
14 | whereby a consumer receives prescription drugs or other | ||||||
15 | pharmaceutical
services and those services are paid for by
an | ||||||
16 | agent of the employer or others.
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17 | (b) "Third party program administrator" or "administrator" | ||||||
18 | means any person,
partnership or corporation who issues or | ||||||
19 | causes to be issued any payment
or reimbursement to a provider | ||||||
20 | for services rendered pursuant to a third
party prescription | ||||||
21 | program, but does not include the Director of Healthcare and | ||||||
22 | Family Services or any agent authorized by
the Director to | ||||||
23 | reimburse a provider of services rendered pursuant to a
program | ||||||
24 | of which the Department of Healthcare and Family Services is | ||||||
25 | the third party.
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26 | (Source: P.A. 95-331, eff. 8-21-07.)
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1 | (215 ILCS 5/512-11 new) | ||||||
2 | Sec. 512-11. Medication synchronization. All entities | ||||||
3 | providing prescription drug coverage shall permit and apply a | ||||||
4 | prorated daily cost-sharing rate to prescriptions that are | ||||||
5 | dispensed by a pharmacy for less than a 30-day supply if the | ||||||
6 | prescriber or pharmacist indicates the fill or refill could be | ||||||
7 | in the best interest of the patient or is for the purpose of | ||||||
8 | synchronizing the patient's chronic medications. | ||||||
9 | No entity providing prescription drug coverage shall deny | ||||||
10 | coverage for the dispensing of any drug prescribed for the | ||||||
11 | treatment of a chronic illness that is made in accordance with | ||||||
12 | a plan among the insured, the prescriber, and a pharmacist to | ||||||
13 | synchronize the refilling of multiple prescriptions for the | ||||||
14 | insured. | ||||||
15 | No entity providing prescription drug coverage shall use | ||||||
16 | payment structures incorporating prorated dispensing fees | ||||||
17 | determined by calculation of the days' supply of medication | ||||||
18 | dispensed. Dispensing fees shall be determined exclusively on | ||||||
19 | the total number of prescriptions dispensed. | ||||||
20 | The provisions of this Section shall not apply to a | ||||||
21 | supplemental insurance policy, including a life care contract, | ||||||
22 | accident-only policy, specified-disease policy, hospital | ||||||
23 | policy providing a fixed daily benefit only, Medicare | ||||||
24 | supplement policy, long-term care policy, or short-term major | ||||||
25 | medical policy of 6 months or less in duration or any other |
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1 | supplemental policy. | ||||||
2 | (215 ILCS 5/512-12 new) | ||||||
3 | Sec. 512-12. Audit of pharmacy records. | ||||||
4 | (a) An entity conducting a pharmacy audit under this | ||||||
5 | Article shall conform to the following requirements: | ||||||
6 | (1) Except as otherwise provided by federal or State | ||||||
7 | law, an auditing entity conducting a pharmacy audit may | ||||||
8 | have access to a pharmacy's previous audit report only if | ||||||
9 | the report was prepared by that auditing entity. | ||||||
10 | (2) Information collected during a pharmacy audit | ||||||
11 | shall be confidential by law, except that the auditing | ||||||
12 | entity conducting the pharmacy audit may share the | ||||||
13 | information with the pharmacy benefits manager and the | ||||||
14 | covered entity for which the pharmacy audit is being | ||||||
15 | conducted. | ||||||
16 | (3) The auditing entity conducting a pharmacy audit may | ||||||
17 | not compensate an employee or contractor with which an | ||||||
18 | auditing entity contracts to conduct a pharmacy audit | ||||||
19 | solely based on the amount claimed or the actual amount | ||||||
20 | recouped by the pharmacy being audited. | ||||||
21 | (4) The auditing entity shall provide the pharmacy | ||||||
22 | being audited with at least 14 calendar days' prior written | ||||||
23 | notice before conducting a pharmacy audit. If a delay is | ||||||
24 | requested by the pharmacy, the pharmacy shall provide | ||||||
25 | notice to the PBM within 72 hours after receiving notice of |
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1 | the audit. | ||||||
2 | (5) The auditing entity may not initiate or schedule a | ||||||
3 | pharmacy audit during the first 5 business days of any | ||||||
4 | month without the express consent of the pharmacy. | ||||||
5 | (6) The auditing entity shall accept paper or | ||||||
6 | electronic signature logs that document the delivery of | ||||||
7 | prescription or nonproprietary drugs and pharmacist | ||||||
8 | services to a health plan beneficiary or the beneficiary's | ||||||
9 | caregiver or guardian. | ||||||
10 | (7) The auditing entity shall provide to the | ||||||
11 | representative of the pharmacy, prior to leaving the | ||||||
12 | pharmacy at the conclusion of the on-site portion of the | ||||||
13 | pharmacy audit, a complete list of pharmacy records | ||||||
14 | reviewed. | ||||||
15 | (8) A pharmacy audit that involves clinical judgment | ||||||
16 | shall be conducted by or in consultation with an | ||||||
17 | Illinois-licensed pharmacist. | ||||||
18 | (9) A pharmacy audit may not cover: | ||||||
19 | (i) a period of more than 24 months after the date | ||||||
20 | a claim was submitted by the pharmacy to the pharmacy | ||||||
21 | benefits manager or covered entity, unless a longer | ||||||
22 | period is required by law; or | ||||||
23 | (ii) more than 250 prescriptions; however, a | ||||||
24 | refill does not constitute a separate prescription for | ||||||
25 | the purposes of this subparagraph. | ||||||
26 | (10) The auditing entity may not use extrapolation to |
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1 | calculate penalties or amounts to be charged back or | ||||||
2 | recouped unless otherwise required by federal requirements | ||||||
3 | or federal plans. | ||||||
4 | (11) The auditing entity may not include dispensing | ||||||
5 | fees in the calculation of overpayments unless a | ||||||
6 | prescription is considered a misfill. As used in this | ||||||
7 | paragraph, "misfill" means a prescription that was not | ||||||
8 | dispensed, a prescription error, a prescription where the | ||||||
9 | prescriber denied the authorization request, or a | ||||||
10 | prescription where an extra dispensing fee was charged. | ||||||
11 | (12) A pharmacy may do any of the following when a | ||||||
12 | pharmacy audit is performed: | ||||||
13 | (i) Use verifiable statements or records, | ||||||
14 | including, but not limited to, medication | ||||||
15 | administration records of a nursing home, assisted | ||||||
16 | living facility, hospital, or health care practitioner | ||||||
17 | with prescriptive authority, to validate the pharmacy | ||||||
18 | record and delivery. | ||||||
19 | (ii) Use any valid prescription, including, but | ||||||
20 | not limited to, medication administration records, | ||||||
21 | facsimiles, electronic prescriptions, electronically | ||||||
22 | stored images of prescriptions, electronically created | ||||||
23 | annotations, or documented telephone calls from the | ||||||
24 | prescribing health care practitioner or practitioner's | ||||||
25 | agent, to validate claims in connection with | ||||||
26 | prescriptions, changes in prescriptions, or refills of |
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1 | prescription or nonproprietary drugs. Documentation of | ||||||
2 | an oral prescription order that has been verified by | ||||||
3 | the prescribing health care practitioner shall meet | ||||||
4 | the provisions of this subparagraph for the initial | ||||||
5 | audit review. | ||||||
6 | (b) An auditing entity shall provide the pharmacy with a | ||||||
7 | written report of the pharmacy audit and shall comply with the | ||||||
8 | following requirements: | ||||||
9 | (1) A preliminary pharmacy audit report must be | ||||||
10 | delivered to the pharmacy or its corporate parent within 30 | ||||||
11 | calendar days after the completion of the pharmacy audit. | ||||||
12 | The preliminary report shall include contact information | ||||||
13 | for the auditing entity that conducted the pharmacy audit | ||||||
14 | and an appropriate and accessible point of contact, | ||||||
15 | including the contact's telephone number, facsimile | ||||||
16 | number, e-mail, and auditing firm, so that audit results, | ||||||
17 | discrepancies, and procedures can be reviewed. The | ||||||
18 | preliminary pharmacy audit report shall include, but not be | ||||||
19 | limited to, claim-level information for any discrepancy | ||||||
20 | found and total dollar amount of claims subject to | ||||||
21 | recovery. | ||||||
22 | (2) A pharmacy shall be allowed 30 calendar days | ||||||
23 | following receipt of the preliminary audit report to | ||||||
24 | respond to the findings of the preliminary report. | ||||||
25 | (3) A final audit report shall be delivered to the | ||||||
26 | pharmacy or its corporate parent not later than 30 calendar |
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1 | days after any responses from the pharmacy or corporate | ||||||
2 | parent are received by the auditing entity. The final audit | ||||||
3 | report may be delivered electronically. The auditing | ||||||
4 | entity shall issue a final pharmacy audit report that | ||||||
5 | includes replying to any responses provided to the auditing | ||||||
6 | entity by the pharmacy or corporate parent. | ||||||
7 | (c) A pharmacy may not be subject to a charge-back or | ||||||
8 | recoupment for a concurrent review or, in the case of an audit, | ||||||
9 | a clerical or recordkeeping error in a required document or | ||||||
10 | record, including a typographical error, scrivener's error, or | ||||||
11 | computer error, unless the error resulted in overpayment to the | ||||||
12 | pharmacy. | ||||||
13 | (d) An auditing entity conducting a pharmacy audit or | ||||||
14 | person acting on behalf of the entity may not withhold payment | ||||||
15 | or charge-back, recoup, or collect penalties from a pharmacy | ||||||
16 | until the time period to file an appeal of a final pharmacy | ||||||
17 | audit report has passed or the appeals process has been | ||||||
18 | exhausted, whichever is later. | ||||||
19 | (e) No interest shall accrue for any party during the audit | ||||||
20 | period, beginning with the notice of the pharmacy audit and | ||||||
21 | ending with the conclusion of the appeals process. | ||||||
22 | (f) A PBM may not recover payment of claims from the | ||||||
23 | pharmacy that are identified through the audit process to be | ||||||
24 | the responsibility of another payer. The PBM must reconcile | ||||||
25 | directly with the other payer for any monies owed without | ||||||
26 | requiring the pharmacy to reverse and rebill the original claim |
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1 | in the retail setting. | ||||||
2 | (g) A pharmacy may appeal a final audit report in | ||||||
3 | accordance with the procedures established by the entity | ||||||
4 | conducting the pharmacy audit. | ||||||
5 | (h) The provisions of this Section do not apply to an | ||||||
6 | investigative audit of pharmacy records if: | ||||||
7 | (1) fraud, waste, abuse, or other intentional | ||||||
8 | misconduct is evidenced by physical review or review of | ||||||
9 | claims data or statements; or | ||||||
10 | (2) other investigative methods provide evidence that | ||||||
11 | a pharmacy is or has been engaged in criminal wrongdoing, | ||||||
12 | fraud, or other intentional or willful misrepresentation. | ||||||
13 | (i) This Section does not supersede any audit requirements | ||||||
14 | established by federal law. | ||||||
15 | (215 ILCS 5/512-13 new) | ||||||
16 | Sec. 512-13. Enforcement. | ||||||
17 | (a) Enforcement of this Article shall be the responsibility | ||||||
18 | of the Department and the Director. | ||||||
19 | (b) The Director shall have the authority to adopt any | ||||||
20 | rules necessary for the implementation and administration of | ||||||
21 | this Article. | ||||||
22 | (c) The Director shall take action or impose penalties to | ||||||
23 | bring non-complying entities into full compliance with this | ||||||
24 | Article. Any violation of this Article may subject a | ||||||
25 | non-complying entity to financial penalties not less than |
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1 | $1,000 per violation.
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2 | Section 99. Effective date. This Act takes effect upon | |||||||||||||||||||||||||||||||||||||||||||||
3 | becoming law.
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