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H.R. 4215 (112th): Medicare Pharmacy Transparency and Fair Auditing Act

The text of the bill below is as of Mar 20, 2012 (Introduced).



2d Session

H. R. 4215


March 20, 2012

introduced the following bill; which was referred to the Committee on Energy and Commerce, and in addition to the Committee on Ways and Means, for a period to be subsequently determined by the Speaker, in each case for consideration of such provisions as fall within the jurisdiction of the committee concerned


To amend title XVIII of the Social Security Act to provide for pharmacy benefits manager standards under the Medicare prescription drug program to further fair audits of and payments to pharmacies.


Short title

This Act may be cited as the Medicare Pharmacy Transparency and Fair Auditing Act.


Pharmacy benefits manager standards under Medicare for fair audits and payments to pharmacies

Section 1860D–12(b) of the Social Security Act (42 U.S.C. 1395w–112(b)) is amended by adding at the end the following new paragraphs:


Pharmacy benefits manager transparency and proper operations requirements

Each contract entered into with a PDP sponsor for the offering of a prescription drug plan under this part for a plan year beginning after 2013 shall provide that the PDP sponsor may not enter into a contract with any pharmacy benefits manager to manage the prescription drug coverage provided under such plan, or to control the costs of the prescription drug coverage under such plan, unless the pharmacy benefits manager satisfies the following requirements:


PBM audit requirements

The following shall apply to each audit of a pharmacy conducted by or for the pharmacy benefits manager with respect to such prescription drug plan:


The period covered by the audit may not exceed 2 years from the date the claim involved was submitted to or adjusted by the pharmacy benefits manager.


In the case the audit involves clinical or professional judgment, the audit shall be conducted by, or in consultation with, a pharmacist licensed in the State of the audit or the State board of pharmacy.


The pharmacy benefits manager may not apply recordkeeping requirements on the pharmacy that are more stringent than such requirements applied under Federal law or the State law involved.


The pharmacy benefits manager, or the entity conducting the audit for the pharmacy benefits manager, shall have in place a written appeals process that shall include procedures for appeals for preliminary reports and final reports related to such audit.


The pharmacy, practice site, or other entity may use the records of a hospital, physician, or other authorized practitioner to validate the pharmacy records and any legal prescription (one that complies with State Board of Pharmacy requirements) may be used to validate claims submitted by the pharmacy in connection with prescriptions, refills, or changes in prescriptions.


The pharmacy benefits manager may not, pursuant to the audit, disallow or reduce payment with respect to a claim submitted by the pharmacy because of a clerical or recordkeeping error (such as a typographical error, scrivener’s error, or computer error) if there is an absence of intent to commit fraud.


The pharmacy benefits manager or other entity conducting the audit may not use extrapolation or other statistical expansion techniques in calculating any recoupment or penalty pursuant to the audit.


The pharmacy benefits manager shall disclose the amount of each payment recovered pursuant to the audit to the PDP sponsor with a copy to the pharmacy.


Any payment recovered by the pharmacy benefit manager pursuant to the audit shall be returned to the PDP sponsor.


Disclosure requirements

In the case of a pharmacy benefits manager that uses a maximum allowable cost list with respect to determining reimbursements to pharmacies for multiple source drugs (as defined in section 1927(k)), with respect to any contract between the pharmacy benefits manager and a pharmacy, with respect to the prescription drug plan offered by the PDP sponsor, the pharmacy benefits manager shall—


include in such contract the methodology and resources utilized for such maximum allowable cost list;


update pricing information on such list at least weekly, starting on January 1 of each calendar year; and


establish a process to provide prompt notification of such pricing information updates to the pharmacy.