HB1643

SECTION 1. Chapter 461, Hawaii Revised Statutes, is amended by adding a new section to be appropriately designated and to read as follows:

"§461- Audit of records of pharmacist or pharmacy. (a) When an audit of records of a pharmacist or pharmacy is conducted by the State, a county, an insurer regulated under article 10A of chapter 431, a mutual benefit society, a health maintenance organization, a pharmacy benefit manager, a medical service organization, a nonprofit hospital, or any other entity representing the same, the audit shall be conducted in the following manner:

(1) Written notice shall be given to the pharmacist or pharmacy at least two weeks before conducting the initial on-site audit for each audit cycle;

(2) Any audit performed under this section that involves clinical or professional judgment shall be conducted in consultation with a pharmacist who has knowledge of this chapter;

(3) Any clerical or recordkeeping error identified during an audit, such as a typographical error, scrivener's error, omission, or computer error, shall not, in and of itself, constitute fraud or intentional misrepresentation and shall not be the basis of a recoupment unless the error results in an actual overpayment to the pharmacy or the wrong medication being dispensed to the patient. Notwithstanding any other law to the contrary, no such claim shall be subject to criminal penalties without proof of intent to commit fraud;

(4) A pharmacist or pharmacy may use the records of a hospital, physician, dentist, veterinarian, advanced practice registered nurse, or other authorized practitioner of the healing arts for drugs or medical supplies written or transmitted by any means of communication for purposes of validating pharmacy records with respect to orders or refills of a legend or narcotic drug;

(5) A finding of overpayment or underpayment may be a projection based on the number of patients served having a similar diagnosis or on the number of similar orders or refills for similar drugs; however, recoupment of claims shall be based on the actual overpayment or underpayment, unless the projection for overpayment or underpayment is part of a settlement as agreed to by the pharmacist or pharmacy;

(6) Each pharmacist or pharmacy shall be audited under the standards and parameters as other similarly situated pharmacists or pharmacies audited by the State, a county, an insurer regulated under article 10A of chapter 431, a mutual benefit society, a health maintenance organization, a pharmacy benefit manager, a medical service organization, a nonprofit hospital, or any other entity representing the same;

(7) A pharmacist or pharmacy shall be allowed the length of time described in the pharmacist's or pharmacy's contract or provider manual, whichever is applicable, which shall be no less than thirty days, following receipt of the preliminary audit report in which to produce documentation to address any discrepancy found during an audit. A pharmacist or pharmacy may correct a clerical or recordkeeping error by submitting an amended claim during the designated time frame if the prescription was dispensed according to the requirements of federal and state law. If the pharmacist's or pharmacy's contract or provider manual does not specify the allowed length of time for the pharmacist or pharmacy to address any discrepancy found in the audit following receipt of the preliminary report, then that pharmacist or pharmacy shall be allowed no less than thirty days following receipt of the preliminary audit report to respond and produce documentation;

(8) The period covered by an audit shall not exceed two years from the date the claim was submitted to or adjudicated by the State, a county, an insurer regulated under article 10A of chapter 431, a mutual benefit society, a health maintenance organization, a pharmacy benefit manager, a medical service organization, a nonprofit hospital, or any other entity representing the same, except this paragraph shall not apply where a longer period is required by any federal rule or law;

(9) An audit shall not be initiated or scheduled during the first seven calendar days of any month due to the high volume of prescriptions filled during that time, unless otherwise consented to by the pharmacist or pharmacy;

(10) The preliminary audit report shall be delivered to the pharmacist or pharmacy within one hundred twenty days after conclusion of the audit. A final audit report shall be delivered to the pharmacist or pharmacy within six months after receipt of the preliminary audit report or final appeal, whichever is later;

(11) Notwithstanding any other law to the contrary, any audit of a pharmacist or pharmacy shall not use the accounting practice of extrapolation in calculating recoupments or penalties for audits; and

(12) Any recoupment related to clerical or recordkeeping errors shall not include the cost of the drug or dispensed product, except in cases of the following:

(A) Fraud or other intentional and wilful misrepresentation;

(B) Dispensing in excess of the pharmacy benefit contract established by a plan sponsor; or

(b) Recoupments of any disputed funds shall only occur after final internal disposition of the audit, including the appeal process as set forth in subsection (c).

(c) Each pharmacy benefit manager conducting an audit shall establish an appeals process under which a pharmacist or pharmacy may appeal an unfavorable preliminary audit report to the pharmacy benefit manager on whose behalf the audit was conducted. The pharmacy benefit manager conducting any audit shall provide to the pharmacist or pharmacy, before or at the time of delivery of the preliminary audit report, a written explanation of the appeals process, including the name, address, and telephone number of the person to whom an appeal should be addressed. If, following the appeal, it is determined that an unfavorable audit report or any portion of the audit report is unsubstantiated, the audit report or the portion shall be dismissed without the necessity of further proceedings.

(d) A pharmacy provider may use any prescription that meets the requirements of being a legal prescription under the laws of the State to validate claims submitted for reimbursement for dispensing of original and refill prescriptions, or changes made to prescriptions.

(e) Auditors may enter the prescription department when accompanied by or authorized by a member of the pharmacy staff. During the auditing process, auditors shall not disrupt the provision of services to the pharmacy's customers.

(f) A demand for recoupment, repayment or offset against future reimbursement for an overpayment on a claim for dispensing of an original or refill prescription shall not 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 contract. This subsection shall not apply where a pharmacy is requested, pursuant to a contractual provision, to correct an error in a claim submitted in good faith.

(g) Audit information from an audit conducted by one pharmacy benefit manager shall not be shared with or utilized by another pharmacy benefit manager. This subsection shall not apply to an investigative audit that is believed by the pharmacy benefit manager to involve fraud or wilful misrepresentation.

(h) Unless otherwise agreed to by contract, no audit finding or demand for recoupment, repayment or offset against future reimbursement shall be made for any claim for dispensing of an original or refill prescription for the reason of information missing from a prescription or for information not placed in a particular location on a prescription when the information or location of the information is not required or specified by federal or state law.

(i) In the event the actual quantity dispensed on a valid prescription for a covered beneficiary exceeds the allowable maximum days supply of the product as defined in the applicable agreement between a pharmacy benefit manager and a pharmacy provider, the amount allowed to be recouped, repaid, or offset against future reimbursement shall be limited to an amount that is 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.

(j) A pharmacy provider shall be allowed to dispense and shall be reimbursed for the full quantity of the smallest available commercially packaged product, including but not limited to eye drops, insulin, and topical products, that contains the total amount that is 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.

(k) The highest daily total dose that may be utilized by the patient pursuant to the prescriber's directions shall be used to make a determination of the days supply. For prescriptions having a titrated dose schedule, the schedule shall be used to determine the days supply.

(l) Subsections (d) to (k) shall not apply to any investigative audit that involves allegations of fraud or wilful misrepresentation.

(m) For purposes of this section, "pharmacy benefit manager" has the same meaning as in section 431S-1."

SECTION 2. New statutory material is underscored.

SECTION 3. This Act shall take effect upon its approval.

INTRODUCED BY:	_____________________________

HOUSE OF REPRESENTATIVES	H.B. NO.	1643
THIRTY-THIRD LEGISLATURE, 2026
STATE OF HAWAII