Wisconsin Legislature: 9,21

(d) In making the claim or performing the service that is the basis for the claim, the pharmacist or pharmacy violated state or federal law.

(e) The reduction is permitted in a contract between a pharmacy and a pharmacy benefit manager and is related to a quality program.

(6) Audits of pharmacies or pharmacists. (a) Definitions. In this subsection:

1. “Audit” means a review of the accounts and records of a pharmacy or pharmacist by or on behalf of an entity that finances or reimburses the cost of health care services or prescription drugs.

2. “Entity” means a defined network plan, as defined in s. 609.01 (1b), insurer, self-insured health plan, or pharmacy benefit manager or a person acting on behalf of a defined network plan, insurer, self-insured health plan, or pharmacy benefit manager.

3. “Self-insured health plan” has the meaning given in s. 632.85 (1) (c).

(b) Procedures. An entity conducting an on-site or desk audit of pharmacist or pharmacy records shall do all of the following:

1. If the audit is an audit on the premises of the pharmacist or pharmacy, notify the pharmacist or pharmacy in writing of the audit at least 2 weeks before conducting the audit.

2. Refrain from auditing a pharmacist or pharmacy within the first 5 business days of a month unless the pharmacist or pharmacy consents to an audit during that time.

3. If the audit involves clinical or professional judgment, conduct the audit by or in consultation with a pharmacist licensed in any state.

4. Limit the audit review to no more than 250 separate prescriptions. For purposes of this subdivision, a refill of a prescription is not a separate prescription.

5. Limit the audit review to claims submitted no more than 2 years before the date of the audit, unless required otherwise by state or federal law.

6. Allow the pharmacist or pharmacy to use authentic and verifiable records of a hospital, physician, or other health care provider to validate the pharmacist's or pharmacy's records relating to delivery of a prescription drug and use any valid prescription that complies with requirements of the pharmacy examining board to validate claims in connection with a prescription, refill of a prescription, or change in prescription.

7. Allow the pharmacy or pharmacist to document the delivery of a prescription drug or pharmacist services to an enrollee under a health benefit plan using either paper or electronic signature logs.

8. Before leaving the pharmacy after concluding the on-site portion of an audit, provide to the representative of the pharmacy or the pharmacist a complete list of the pharmacy records reviewed.

1. Deliver to the pharmacist or pharmacy a preliminary report of the audit within 60 days after the date the auditor departs from an on-site audit or the pharmacy or pharmacist submits paperwork for a desk audit. A preliminary report under this subdivision shall include claim-level information for any discrepancy reported, the estimated total amount of claims subject to recovery, and contact information for the entity or person that completed the audit so the pharmacist or pharmacy subject to the audit may review audit results, procedures, and discrepancies.

2. Allow a pharmacist or pharmacy that is the subject of an audit to provide documentation to address any discrepancy found in the audit within 30 days after the date the pharmacist or pharmacy receives the preliminary report.

3. Deliver to the pharmacist or pharmacy a final audit report, which may be delivered electronically, within 90 days of the date the pharmacist or pharmacy receives the preliminary report or the date of the final appeal of the audit, whichever is later. The final audit report under this subdivision shall include any response provided to the auditor by the pharmacy or pharmacist and consider and address the pharmacy's or pharmacist's response.

4. Refrain from assessing a recoupment or other penalty on a pharmacist or pharmacy until the appeal process is exhausted and the final report under subd. 3. is delivered to the pharmacist or pharmacy.

5. Refrain from accruing or charging interest between the time the notice of the audit is given under par. (b) 1. and the final report under subd. 3. has been delivered.

6. Exclude dispensing fees from calculations of overpayments.

7. Establish and follow a written appeals process that allows a pharmacy or pharmacist to appeal the final report of an audit and allow the pharmacy or pharmacist as part of the appeal process to arrange for, at the cost of the pharmacy or pharmacist, an independent audit.

8. Refrain from subjecting the pharmacy or pharmacist to a recoupment or recovery for a clerical or record-keeping error in a required document or record, including a typographical or computer error, unless the error resulted in an overpayment to the pharmacy or pharmacist.

(d) Confidentiality of audit. Information obtained in an audit under this subsection is confidential and may not be shared unless the information is required to be shared under state or federal law and except that the audit may be shared with the entity on whose behalf the audit is performed. An entity conducting an audit may have access to the previous audit reports on a particular pharmacy only if the audit is conducted by the same entity.

(e) Cooperation with audit. If an entity is conducting an audit that is complying with this subsection in auditing a pharmacy or pharmacist, the pharmacy or pharmacist that is the subject of the audit may not interfere with or refuse to participate in the audit.

(f) Payment of auditors. A pharmacy benefit manager or entity conducting an audit may not pay an auditor employed by or contracted with the pharmacy benefit manager or entity based on a percentage of the amount recovered in an audit.

(g) Applicability. 1. This subsection does not apply to an investigative audit that is initiated as a result of a credible allegation of fraud or willful misrepresentation or criminal wrongdoing.

2. If an entity conducts an audit to which a federal law applies that is in conflict with all or part of this subsection, the entity shall comply with this subsection only to the extent that it does not conflict with federal law.

(7) Transparency reports. (a) Beginning on June 1, 2021, and annually thereafter, every pharmacy benefit manager shall submit to the commissioner a report that contains, from the previous calendar year, the aggregate rebate amount that the pharmacy benefit manager received from all pharmaceutical manufacturers but retained and did not pass through to health benefit plan sponsors and the percentage of the aggregate rebate amount that is retained rebates. Information required under this paragraph is limited to contracts held with pharmacies located in this state.

(b) Reports under this subsection shall be considered a trade secret under the uniform trade secret act under s. 134.90.

(c) The commissioner may not expand upon the reporting requirement under this subsection, except that the commissioner may effectuate this subsection.

9,22 Section 22 . Chapter 633 (title) of the statutes is amended to read:

CHAPTER 633
EMPLOYEE BENEFIT PLAN
ADMINISTRATORS AND, PRINCIPALS ,
and Pharmacy benefit managers

9,23 Section 23 . 633.01 (1) (intro.) and (c) of the statutes are amended to read:

633.01 (1) (intro.) “Administrator" means a person who directly or indirectly solicits or collects premiums or charges or otherwise effects coverage or adjusts or settles claims for a an employee benefit plan, but does not include the following persons if they perform these acts under the circumstances specified for each:

(c) A creditor on behalf of its debtor, if to obtain payment, reimbursement or other method of satisfaction from a an employee benefit plan for any part of a debt owed to the creditor by the debtor.

9,24 Section 24 . 633.01 (2r) of the statutes is created to read:

633.01 (2r) “Enrollee” has the meaning given in s. 632.861 (1) (b).

9,25 Section 25 . 633.01 (3) of the statutes is amended to read:

633.01 (3) “Insured employee" means an employee who is a resident of this state and who is covered under a an employee benefit plan.

9,26 Section 26 . 633.01 (4) of the statutes is renumbered 633.01 (2g) and amended to read:

633.01 (2g) “Plan Employee benefit plan" means an insured or wholly or partially self-insured employee benefit plan which by means of direct payment, reimbursement or other arrangement provides to one or more employees who are residents of this state benefits or services that include, but are not limited to, benefits for medical, surgical or hospital care, benefits in the event of sickness, accident, disability or death, or benefits in the event of unemployment or retirement.

9,27 Section 27 . 633.01 (4g) of the statutes is created to read:

633.01 (4g) “Pharmacy benefit manager” has the meaning given in s. 632.865 (1) (c).

9,28 Section 28 . 633.01 (4r) of the statutes is created to read:

633.01 (4r) “Prescription drug benefit” has the meaning given in s. 632.865 (1) (e).

9,29 Section 29 . 633.01 (5) of the statutes is amended to read:

633.01 (5) “Principal" means a person, including an insurer, that uses the services of an administrator to provide a an employee benefit plan.

9,30 Section 30 . 633.01 (6) of the statutes is created to read:

633.01 (6) “Self-insured health plan" has the meaning given in s. 632.85 (1) (c).

9,31 Section 31 . 633.04 (intro.) of the statutes is amended to read:

633.04 Written agreement required. (intro.) An administrator may not administer a an employee benefit plan in the absence of a written agreement between the administrator and a principal. The administrator and principal shall each retain a copy of the written agreement for the duration of the agreement and for 5 years thereafter. The written agreement shall contain the following terms:

9,32 Section 32 . 633.05 of the statutes is amended to read:

633.05 Payment to administrator. If a principal is an insurer, payment to the administrator of a premium or charge by or on behalf of an insured employee is payment to the insurer, but payment of a return premium or claim by the insurer to the administrator is not payment to an insured employee until the payment is received by the insured employee. This section does not limit any right of the insurer against the administrator for failure to make payments to the insurer or an insured employee.

9,33 Section 33 . 633.06 of the statutes is amended to read:

633.06 Examination and inspection of books and records. (1) The commissioner may examine, audit or accept an audit of the books and records of an administrator or pharmacy benefit manager as provided for examination of licensees under s. 601.43 (1), (3), (4) and (5), to be conducted as provided in s. 601.44, and with costs to be paid as provided in s. 601.45.

(2) A principal that uses an administrator may inspect the books and records of the administrator, subject to any restrictions set forth in ss. 146.81 to 146.835 and in the written agreement required under s. 633.04, for the purpose of enabling the principal to fulfill its contractual obligations to insureds insured employees.

9,34 Section 34 . 633.07 of the statutes is amended to read:

633.07 Approval of advertising. An administrator may not use any advertising for a an employee benefit plan underwritten by an insurer unless the insurer approves the advertising in advance.

9,35 Section 35 . 633.09 (4) (b) 2. and 3. of the statutes are amended to read:

633.09 (4) (b) 2. To a an employee benefit plan policyholder for payment to a principal, the funds belonging to the principal.

3. To an insured employee, the funds belonging to the insured employee.

9,36 Section 36 . 633.11 of the statutes is amended to read:

633.11 Claim adjustment compensation. If an administrator adjusts or settles claims under a an employee benefit plan, the commission, fees or charges that the principal pays the administrator may not be based on the employee benefit plan's loss experience. This section does not prohibit compensation based on the number or amount of premiums or charges collected, or the number or amount of claims paid or processed by the administrator.

9,37 Section 37 . 633.12 (1) (intro.), (b) and (c) of the statutes are amended to read:

633.12 (1) (intro.) An administrator shall prepare sufficient copies of a written notice approved in advance by the principal for distribution to all insureds insured employees of the principal and either shall distribute the copies to the insureds insured employees or shall provide the copies to the principal for distribution to the insureds insured employees. The written notice shall contain all of the following:

(b) An explanation of the respective rights and responsibilities of the administrator, the principal and the insureds insured employees.

(c) A statement of the extent to which the employee benefit plan is insured or self-insured, and an explanation of the terms “insured" and “self-insured".

9,38 Section 38 . 633.13 (1) and (3) of the statutes are amended to read:

633.13 (1) General. Except as provided in sub. (2), a person may not perform, offer to perform or advertise any service as an administrator or a pharmacy benefit manager unless the person has obtained a license under s. 633.14. A pharmacy benefit manager that also performs services as an administrator need only obtain an administrator license under s. 633.14.

(3) Responsibilities of principal. A principal may not use the services of an administrator unless the administrator furnishes proof of licensure under s. 633.14 or exemption under sub. (2). An insurer or a self-insured health plan may not use the services of a pharmacy benefit manager unless the pharmacy benefit manager furnishes proof of licensure under s. 633.14.

9,39 Section 39 . 633.14 (2) (intro.) and (c) 1. and 3. and (3) of the statutes are amended to read:

633.14 (2) (intro.) The commissioner shall issue a license to act as an administrator or pharmacy benefit manager to a corporation, limited liability company or partnership that does all of the following:

(c) 1. That the corporation, limited liability company or partnership intends in good faith to act as an administrator or pharmacy benefit manager through individuals designated under subd. 3. in compliance with applicable laws of this state and rules and orders of the commissioner.

3. That for each employee benefit plan or prescription drug benefit to be administered, the corporation, limited liability company or partnership has designated or will designate an individual in the corporation, limited liability company or partnership to directly administer the employee benefit plan or prescription drug benefit.

(3) The commissioner shall promulgate rules establishing the specifications that a bond supplied by an administrator or pharmacy benefit manager under sub. (1) (b) or (2) (b) must satisfy to guarantee faithful performance of the administrator or pharmacy benefit manager.

9,40 Section 40 . 633.15 (1) (a), (1m) and (2) (a) 1., 2. and 3. and (b) 1. of the statutes are amended to read:

633.15 (1) (a) Payment. An administrator or pharmacy benefit manager shall pay the annual renewal fee under s. 601.31 (1) (w) for each annual renewal of a license by the date specified by a schedule established under par. (b).

(1m) Social security number, federal employer identification number or statement. At an annual renewal, an administrator or pharmacy benefit manager shall provide his or her social security number, if the administrator is an individual unless he or she does not have a social security number, or its federal employer identification number, if the administrator or pharmacy benefit manager is a corporation, limited liability company or partnership, if the social security number or federal employer identification number was not previously provided on the application for the license or at a previous renewal of the license. If an administrator who is an individual does not have a social security number, the individual shall provide to the commissioner, at each annual renewal and on a form prescribed by the department of children and families, a statement made or subscribed under oath or affirmation that the administrator does not have a social security number.

(2) (a) 1. If an administrator or pharmacy benefit manager fails to pay the annual renewal fee as provided under sub. (1) or fails to provide a social security number, federal employer identification number or statement made or subscribed under oath or affirmation as required under sub. (1m), the commissioner shall suspend the administrator's or pharmacy benefit manager's license effective the day following the last day when the annual renewal fee may be paid, if the commissioner has given the administrator or pharmacy benefit manager reasonable notice of when the fee must be paid to avoid suspension.

2. If, within 60 days from the effective date of suspension under subd. 1., an administrator or pharmacy benefit manager pays the annual renewal fee or provides the social security number, federal employer identification number or statement made or subscribed under oath or affirmation, or both if the suspension was based upon a failure to do both, the commissioner shall reinstate the administrator's or pharmacy benefit manager's license effective as of the date of suspension.

3. If payment is not made or the social security number, federal employer identification number or statement made or subscribed under oath or affirmation is not provided within 60 days from the effective date of suspension under subd. 1., the commissioner shall revoke the administrator's or pharmacy benefit manager's license.

(b) 1. Except as provided in pars. (c) to (e), the commissioner may revoke, suspend or limit the license of an administrator or pharmacy benefit manager after a hearing if the commissioner makes any of the following findings:

a. That the administrator or pharmacy benefit manager is unqualified to perform the responsibilities of an administrator or pharmacy benefit manager.

b. That the administrator or pharmacy benefit manager has repeatedly or knowingly violated an applicable law, rule or order of the commissioner.

c. That If the licensee is an administrator, that the administrator's methods or practices in administering a an employee benefit plan endanger the interests of insureds insured employees or the public, or that the financial resources of the administrator are inadequate to safeguard the interests of insureds insured employees or the public.

9,41 Section 41 . 633.15 (2) (b) 1. d. of the statutes is created to read: