The Vermont Statutes Online

Title 18: Health

Chapter 079: Pharmacy Audits

• § 3801. Definitions

  As used in this subchapter:

  (1)(A) “Health insurer” shall have the same meaning as in section 9402 of this title and shall include:

  (i) a health insurance company, a nonprofit hospital and medical service corporation, and health maintenance organizations;

  (ii) an employer, a labor union, or another group of persons organized in Vermont that provides a health plan to beneficiaries who are employed or reside in Vermont; and

  (iii) except as otherwise provided in section 3805 of this title, the State of Vermont and any agent or instrumentality of the State that offers, administers, or provides financial support to State government.

  (B) The term “health insurer” shall not include Medicaid or any other Vermont public health care assistance program.

  (2) “Health plan” means a health benefit plan offered, administered, or issued by a health insurer doing business in Vermont.

  (3) “Pharmacy” means any individual or entity licensed or registered under 26 V.S.A. chapter 36.

  (4) “Pharmacy benefit management” means an arrangement for the procurement of prescription drugs at a negotiated rate for dispensation within this State to beneficiaries, the administration or management of prescription drug benefits provided by a health plan for the benefit of beneficiaries, or any of the following services provided with regard to the administration of pharmacy benefits:

  (A) mail service pharmacy;

  (B) claims processing, retail network management, and payment of claims to pharmacies for prescription drugs dispensed to beneficiaries;

  (C) clinical formulary development and management services;

  (D) rebate contracting and administration;

  (E) certain patient compliance, therapeutic intervention, and generic substitution programs; and

  (F) disease or chronic care management programs.

  (5) “Pharmacy benefit manager” means an entity that performs pharmacy benefit management. The term includes a person or entity in a contractual or employment relationship with an entity performing pharmacy benefit management for a health plan.

  (6) “Responsible party” means the entity, including a health insurer or pharmacy benefit manager, responsible for payment of claims for health care services other than:

  (A) the individual to whom the health care services were rendered;

  (B) that individual’s guardian or legal representative; or

  (C) the Agency of Human Services, its agents, and contractors. (Added 2011, No. 150 (Adj. Sess.), § 4; amended 2013, No. 79, § 18, eff. Jan. 1, 2014.)

• § 3802. Pharmacy rights during an audit

  Notwithstanding any provision of law to the contrary, whenever a health insurer, a third-party payer, or an entity representing a responsible party conducts an audit of the records of a pharmacy, the pharmacy shall have a right to all of the following:

  (1) To have an audit involving clinical or professional judgment be conducted by a pharmacist licensed to practice pharmacy in one or more states, who has at least a familiarity with Vermont pharmacy statutes and rules and who is employed by or working with an auditing entity.

  (2) If an audit is to be conducted on-site at a pharmacy, the entity conducting the audit:

  (A) shall give the pharmacy at least 14 days’ advance written notice of the audit and the specific prescriptions to be included in the audit;

  (B) shall not audit a pharmacy on Mondays or on weeks containing a federal holiday, unless the pharmacy agrees to alternative timing for the audit; and

  (C) shall not audit claims that:

  (i) were submitted to the pharmacy benefit manager more than 18 months prior to the date of the audit, unless:

  (I) required by federal law; or

  (II) the originating prescription was dated within the 24- month period preceding the date of the audit; or

  (ii) exceed 200 selected prescription claims.

  (3) If any audit is to be conducted remotely, the entity conducting the audit:

  (A) shall give the pharmacy at least seven business days following the pharmacy’s confirmation of receipt of the notice of the audit to respond to the audit; and

  (B) shall not audit claims that:

  (i) were submitted to the pharmacy benefit manager more than three months prior to the date of the audit or on a date earlier than that for which the pharmacy could electronically retransmit a corrected claim; or

  (ii) exceed five selected prescription claims.

  (4) To have auditors enter the prescription department only when accompanied by or authorized by a member of the pharmacy staff, and not to have auditors disrupt the provision of services to the pharmacy’s customers.

  (5) Not to have clerical or recordkeeping errors, including typographical errors, scrivener’s errors, and computer errors, on a required document or record deemed fraudulent in the absence of any financial harm or other evidence; provided that this subdivision shall not be construed to prohibit recoupment of actual fraudulent payments.

  (6) If required under the terms of the contract, to have the auditing entity provide to the pharmacy, upon request, all records related to the audit in an electronic or digital media format.

  (7) In order to validate a pharmacy record with respect to a prescription or refill, to have the properly documented records of a hospital or of any person authorized by law to prescribe medication transmitted by any means of communication.

  (8) To use any prescription that meets the requirements to be a legal prescription under Vermont law, including prescriber notations such as “as directed” and “as needed,” which require the professional judgment of the pharmacist to determine that the dose dispensed is within normal guidelines, to validate claims submitted for reimbursement for dispensing of original and refill prescriptions, or changes made to prescriptions.

  (9) To dispense and receive reimbursement for the full quantity of the smallest commonly available commercially packaged product, including eye drops, insulin, and topical products, that contains the total amount required to be dispensed to meet the days’ supply ordered by the prescriber, even if the full quantity of the commercially prepared package exceeds the maximum days’ supply allowed.

  (10) To determine the days’ supply using the highest daily total dose that may be utilized by the patient pursuant to the prescriber’s directions, and for prescriptions with a titrated dose schedule, to use the schedule to determine the days’ supply.

  (11) To be subject to recoupment only following the correction of a claim and to have recoupment limited to amounts paid in excess of amounts payable under the corrected claim.

  (12) Not to have a demand for recoupment, repayment, or offset against future reimbursement for overpayment of a claim for dispensing of an original or refill prescription include the dispensing fee, unless the prescription that is the subject of the claim was not actually dispensed, was not valid, was fraudulent, or was outside the provisions of the contract; provided that this subdivision shall not apply if a pharmacy is required to correct an error in a claim submitted in good faith.

  (13) Unless otherwise agreed to by contract, not to have an audit finding or demand for recoupment, repayment, or offset against future reimbursement made for any claim for dispensing of an original or refill prescription due to information missing from a prescription or to information not placed in a particular location when the information or location is not required or specified by State or federal law. The pharmacy shall be allowed 30 days to document and correct the missing information.

  (14) In the event the actual quantity dispensed on a valid prescription for a covered beneficiary exceeded the allowable maximum days’ supply of the product as defined in the contract, to have the amount to be recouped, repaid, or offset against future reimbursement limited to an amount calculated based on the quantity of the product dispensed found to be in excess of the allowed days’ supply quantity and using the cost of the product as reflected on the original claim.

  (15) Not to have the accounting practice of extrapolation used in calculating any recoupment or penalty, unless otherwise required by federal law or by federal health plans.

  (16) Except for cases of federal Food and Drug Administration regulation or drug manufacturer safety programs, to be free of recoupments based on either:

  (A) documentation requirements in addition to or in excess of State Board of Pharmacy documentation creation or maintenance requirements; or

  (B) a requirement that a pharmacy or pharmacist perform a professional duty in addition to or in excess of State Board of Pharmacy professional duty requirements.

  (17) Except for Medicare claims, to be subject to reversals of approval for drug, prescriber, or patient eligibility upon adjudication of a claim only in cases in which the pharmacy obtained the adjudication by fraud or misrepresentation of claim elements.

  (18) To be audited under the same standards and parameters as other similarly situated pharmacies audited by the same entity.

  (19) To have the preliminary audit report delivered to the pharmacy within 30 days following the pharmacy’s preliminary response.

  (20) To have at least 30 days following receipt of the preliminary audit report to produce documentation to address any discrepancy found during the audit.

  (21) To have a final audit report delivered to the pharmacy within 30 days after the end of the appeals period, as required by section 3803 of this title.

  (22) Except for audits initiated to address an identified problem, to be subject to no more than one audit per calendar year, unless fraud or misrepresentation is reasonably suspected.

  (23) Not to have audit information from an audit conducted by one auditing entity shared with or utilized by another auditing entity, except as required by State or federal law.

  (24) To have all payment data related to audited claims, including:

  (A) payment amount;

  (B) any direct and indirect remuneration (DIR) or generic effective rate (GER) fees assessed or other financial offsets;

  (C) date of electronic payment or check date and number;

  (D) the specific contracted reimbursement basis for each claim, including its basis, such as maximum allowable cost (MAC), wholesale acquisition cost (WAC), average wholesale price (AWP), or average manufacturer price (AMP); and

  (E) the respective values used to calculate each claim payment. (Added 2011, No. 150 (Adj. Sess.), § 4; amended 2021, No. 131 (Adj. Sess.), § 3, eff. January 1, 2023.)

• § 3803. Appeals

  (a) An entity that audits a pharmacy shall provide the pharmacy with a preliminary audit report, which shall be delivered to the pharmacy or to its corporate office of record within 60 days following completion of the audit.

  (b) A pharmacy shall have 30 days following receipt of the preliminary audit report in which to respond to questions, provide additional documentation, and comment on and clarify audit findings. Receipt of the report shall be based on the date postmarked on the envelope or the date of a computer transmission, if transferred electronically.

  (c) If an audit results in the dispute or denial of a claim, the entity conducting the audit shall allow the pharmacy to resubmit the claim using any commercially reasonable method, including U.S. mail, facsimile, or electronic claims submission, as long as the period of time during which a claim may be resubmitted has not expired.

  (d) Within 120 days after the completion of the appeals process established by this section, a final audit report shall be delivered to the pharmacy or to its corporate office of record. The final audit report shall include a disclosure of any funds recovered by the entity that conducted the audit.

  (e) An entity that audits a pharmacy shall have in place a written appeals process by which a pharmacy may appeal the preliminary audit report and the final audit report, and shall provide the pharmacy with notice of the appeals process.

  (f) A pharmacy shall be entitled to request a mediator agreed upon by both parties to resolve any disagreements; such request shall not be deemed to waive any existing rights of appeal. (Added 2011, No. 150 (Adj. Sess.), § 4.)

• § 3804. Pharmacy audit recoupments

  (a) Recoupment of any disputed funds shall occur only after the final internal disposition of an audit, including the appeals process set forth in section 3803 of this title.

  (b) An entity conducting an audit may not:

  (1) include dispensing fees in calculations of overpayments unless the prescription is determined to have been dispensed in error;

  (2) recoup funds for clerical or recordkeeping errors, including typographical errors, scriveners’ errors, and computer errors on a required document or record unless the error resulted in overpayment or the entity conducting the audit has evidence that the pharmacy’s actions reasonably indicate fraud or other intentional or willful misrepresentation;

  (3) collect any funds, charge-backs, or penalties until the audit and all appeals are final, unless the entity conducting the audit is alleging fraud or other intentional or willful misrepresentation;

  (4) recoup an amount in excess of the actual overpayment.

  (c) Recoupment on an audit shall be refunded to the responsible party as contractually agreed upon by the parties.

  (d) The entity conducting the audit may charge or assess the responsible party, directly or indirectly, based on amounts recouped if both of the following conditions are met:

  (1) the responsible party and the entity conducting the audit have entered into a contract that explicitly states the percentage charge or assessment to the responsible party; and

  (2) 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. (Added 2011, No. 150 (Adj. Sess.), § 4.)

• § 3805. Applicability

  The provisions of this chapter shall not apply to any audit or investigation undertaken by any State agency, including the Office of the Attorney General or the Agency of Human Services, to a fiscal agent of the State, or to any audit, review, or investigation that involves alleged Medicaid fraud, Medicaid waste, Medicaid abuse, insurance fraud, or criminal fraud or misrepresentation. (Added 2011, No. 150 (Adj. Sess.), § 4.)