senate Bill S1511

2009-2010 Legislative Session

Relates to how audits of Medicaid-related records of pharmacy providers shall be conducted

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Archive: Last Bill Status - In Committee

  • Introduced
  • In Committee
  • On Floor Calendar
    • Passed Senate
    • Passed Assembly
  • Delivered to Governor
  • Signed/Vetoed by Governor

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Assembly Actions - Lowercase
Senate Actions - UPPERCASE
Jan 06, 2010 referred to health
Feb 02, 2009 referred to health

S1511 - Bill Details

Current Committee:
Law Section:
Public Health Law

S1511 - Bill Texts

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An act to amend the public health law, in relation to audits of
Medicaid pharmacy providers


This bill provides limitations on Medicaid auditing practices in
relation to pharmacy providers.


§ 1- Amends Article 1, Title III of the Public Health Law by adding a
new § 32- A related to auditing standards and procedures of the Office
of the Medicaid Inspector General. The new § 32-A:

* Requires that adequate prior notice be given, to responsible
individuals in the pharmacy's operations that an audit has been
scheduled and prohibits an audit from being scheduled during the first
5 business days of any calendar month.

* Allows for the submission of electronic records in an audit where
otherwise acceptable under state and federal law.

* States that a contract auditor may not be paid based on the number
of challenged or denied claims identified by the auditor or the amount
found to be owed.

* Sets standards for auditors and audits and requires that any audit
involving the review of clinical or professional judgment shall be
conducted by or in consultation with the State Board of Pharmacy.

* Limits the retroactive coverage of Medicaid audits to a one-year

* States that clerical and record-keeping errors may not be deemed to
be willful violations of the Medicaid law or subject to criminal
penalties without proof of a willful intent to commit fraud.

* Limits the use of extrapolation to determine overpayment amounts and
requires that extrapolation meet certain standards when utilized.

* Permits an audited pharmacy 10 days to provide documentation to
address any discrepancy found by the auditor and establishes a
schedule for preliminary audit reports and final audit reports to be
sent to the responsible individuals in the pharmacy's operations.

* Allows pharmacies to use the records or orders of prescribing
physicians, hospitals or other prescribers as acceptable means to
validate a pharmacy record of a prescription.

* Provides a procedure for an administrative appeal by an audited
pharmacy, to be established by regulation.

* Establishes acceptable procedures for state recoupment or collection
of Medicaid overpayments to the audited pharmacy.

§ 2- Effective date.

In recent months, pharmacies have been the subject of intense Medicaid
audits by the office of the Medicaid Inspector General (OMIG) and
contingency-based auditing firms at the state and county levels for
administrative or clerical errors which through the use of
extrapolation have resulted in exorbitant fines and payment
recoupments per individual audit.

While the OMIG's efforts to identify and punish real Medicaid provider
fraud and abuse are very important, pharmacies are being targeted by
the OMIG for clerical mistakes, errors or misinterpretations that in
no way constitute fraud and abuse. This legislation provides
limitations on the OMIG when auditing pharmacies to ensure that its
actions are consistent with the real intent of the 2006 law creating
the OMIG and its duties prosecuting providers who are defrauding the
program with willful intent and negatively impacting patient health
and safety.

This legislation establishes limitations on OMIG auditing activities
of pharmacy providers by prohibiting the use of extrapolation for
clerical mistakes or errors and setting auditing procedures and
standards to restore fairness and integrity in the OMIG auditing


S.8258/A10333 of 2008



This act shall take effect on the one hundred twentieth day after it
shall have become a law; provided, however, that effective
immediately, the addition, amendment and/or repeal of any rule of
regulation necessary for the implementation of this act on its
effective date are authorized and directed to be made and completed on
or before such effective date.
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