Florida Lawmakers Attempt to Pass Legislation Regulating Pharmacy Benefit Managers

In recent years, the role of pharmacy benefit managers (PBMs) occupy has grown significantly. However, as their role—and power that comes along with it—grows, the regulation of PBMs has been slow to follow. In fact, PBMs are not regulated on the federal level, and many states stay out of the relationship between PBMs and the pharmacies they oversee. This means that the rights of a pharmacy are entirely outlined by contracts that are written by PBMs. Needless to say, the general consensus among pharmacists is that PBMs operate in a black box.

Not surprisingly, over recent years, pharmacists have expressed concern over the lack of meaningful regulation over PBMs. There have been many instances where a PBM conducts an audit and, for the most apparently insignificant “violation,” pursues severe sanctions against a pharmacy.

Lawmakers in Florida are in the process of debating two bills—one from each House—that would strengthen state-level regulation over PBMs. According to a recent news report, The House Health & Human Services Committee of the Florida House of Representatives unanimously approved House Bill 357 (“HB 357”). HB 357 is not notable because it creates new regulatory rules, as there have been Florida laws that regulate PBMs on the books for years; however, what it does do is provide previously unenforceable laws with some teeth.

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The Florida Pharmacy Act of 2014

The Florida Pharmacy Act of 2014 was the state’s first effort at regulating PBMs. The law created certain rights for pharmacists related to PBM audits. For example, under the Florida Pharmacy Act of 2014, pharmacists were entitled to at least seven days’ notice of an upcoming audit and limited the look-back period of a PBM audit to 24 months.

Later, in 2018, the Florida Pharmacy Act of 2014 was amended to require all PBMs to register with the state by January 1, 2019. However, because there was no penalty for a PBM’s failure to register, few PBMs took the law seriously.

House Bill 357

Perhaps the most important aspect of HB 357 is that it provides that “a person who fails to register with the office while operating as a pharmacy benefit manager is subject to a fine of $10,000 for each violation.” The proposed legislation also adds additional rights to those pharmacists already had under the previous iteration of the law. Thus, if passed, HB 357 would amend the Florida Pharmacy Act of 2014 to include the following rights:

• Pharmacists must be notified of an audit at least seven days in advance;
• PBM audits cannot occur during the first three business days of the month without the pharmacy’s consent;
• PBM audits are limited to a 24-month look-back period;
• Audits requiring the exercise of clinical or professional judgment must be conducted by a pharmacist or with their involvement;
• Pharmacists can meet production requests by presenting “written and verifiable records of a hospital, physician, or other authorized practitioner, which are transmitted by any means of communication”;
• Pharmacists must be reimbursed for filled prescriptions that contained clerical, computer, or typographical errors (unless there is a pattern of non-compliance);
• Pharmacies must receive a copy of the audit report within 120 days of the audit;
• Pharmacies have ten days to submit documentation to address any discrepancy discovered during an audit;
• Pharmacies must receive the final audit report within six months of the audit;
• Any overpayment penalties must be based on the actual amount of any overpayment; and
• Pharmacies can appeal any adverse claim-payment determination outlined in the final audit report.

The bill would also transfer regulation of PBMs from state health regulators to the Florida Office of Insurance Regulation, giving the Office the power to sanction PBMs that do not comply with the law. The bill also makes clear that a health insurer or HMO can be held responsible for violations of the pharmacy audit.

The Florida Senate is also discussing a similar bill, Senate Bill 1476. Regardless of which version passes, it appears that Florida lawmakers are finally hearing the call of the thousands of independent pharmacists across the state.

What Is at Stake in a PBM Audit?

PBM audits are intended to ensure that pharmacies are not improperly billing the insurance company. If violations are uncovered during an audit, a PBM may issue a recoupment (withholding funds that are otherwise payable to the pharmacy), begin demanding prepayment review, deny pending claims, or even terminate the contract with the pharmacy. Often, these sanctions are handed down without reason or explanation.

Additionally, if auditors discover issues that lead them to believe a pharmacy is violating state or federal law, the PBM may refer the case to state or federal law enforcement. This opens the door to much more severe consequences, including a federal healthcare fraud lawsuit.

Are You Facing an Upcoming PBM Audit?

Pharmacy benefit managers regularly conduct audits of participating pharmacies. While pharmacists know their business best, they may not be prepared to address the burdensome demands of a PBM auditor. At Oberheiden, P.C., our pharmacy audit and defense attorneys have extensive experience representing pharmacies through all types of PBM audits. We regularly interevent early in the audit process to ensure that pharmacy management teams understand their rights and to ensure that auditors conduct the audit according to both the governing laws as well as the terms of the PBM contract. We also negotiate with PBMs following unfavorable audits, helping our clients avoid recoupments, contract terminations, and other sanctions. To learn more, and to schedule a free consultation with a PBM audit defense attorney at Oberheiden., P.C., call 1-888-680-1745. You can also connect with us through our online contact form.