This section explains important definitions used in the context of pharmacy benefits and audits. A 'carrier' refers to a health plan or insurer. 'Clerical or recordkeeping errors' are minor mistakes, like typos, in records. 'Extrapolation' is when they estimate payment errors by looking at a sample of claims. A 'health benefit plan' covers or reimburses health costs, while the 'maximum allowable cost' is the most a pharmacy manager will pay for a drug. The 'maximum allowable cost list' indicates which drugs have price limits. 'Obsolete' drugs are those no longer usable. 'Pharmacy' is defined in another section, and a 'pharmacy audit' inspects a pharmacy's records about drugs dispensed under health plans. Lastly, a 'pharmacy benefit manager' oversees prescription drug coverage for health plans, including claims processing and cost management.

This section states that certain rules don't apply to audits conducted when there's a reasonable suspicion of illegal activity, such as fraud or abuse, particularly by pharmacy-related organizations. Additionally, it excludes audits done by specific government health agencies and Medicare from these rules.

This law says that any contract made or changed between a pharmacy and a health insurance provider or manager, to give pharmacy services to health plan members after January 1, 2013, must follow certain rules. However, this does not apply to certain workers' compensation contracts.

If a company audits a pharmacy, they can't be paid based on how much money they recover from the pharmacy. However, they can charge the plan sponsor if their contract clearly states the details and if no staff are incentivized by the recouped amounts. Also, pharmacies can't lose money for simple errors unless those errors caused real financial harm.

This law outlines privacy and procedural requirements for pharmacy audits. Entities that conduct pharmacy audits must keep collected information confidential unless sharing it with the carrier, pharmacy benefit manager, or third-party payer involved in the audit. They can only access past audit reports of the same pharmacy if conducted by themselves or on their behalf. However, employers and others can share general opinions based on the audit findings. Before conducting an audit, non-carriers must notify the pharmacy that there is a privacy agreement in place with carriers. Finally, auditors must provide a list of reviewed records to the pharmacy after the onsite audit portion to ensure compliance with privacy laws.

This law says that if a company wants to audit a pharmacy at its location, they can't start or plan the audit during the first week of any month unless the pharmacy agrees. Also, the company must give the pharmacy at least two weeks' written notice before the first audit begins.

This law regulates how pharmacy audits should be conducted. It mandates that any audit involving clinical judgment needs a licensed pharmacist's input. The entity doing the audit must check the legality of prescriptions according to specific standards. Also, nothing stops pharmacy benefits managers from rejecting claims if they don't meet particular requirements like FDA guidelines or proper documentation. Lastly, auditors must accept either paper or electronic signature logs as proof of service delivery to patients.

If a pharmacy benefits manager wants to audit a pharmacy's claims, they can't look at claims older than 24 months from when the claim was submitted or processed. However, if a different law says they can, or if they need the original prescription, they might be able to go back further.

This law ensures transparency and fairness in pharmacy audits. After an audit, a preliminary report is provided to the pharmacy, allowing 30 days to address any issues. Pharmacies can use various forms of documentation, including prescriptions and medical records, to support their case. If penalties are suggested, pharmacies can counter with proof to challenge them. A final report must be delivered within 120 days after the pharmacy's response, with at least 30 days to appeal any findings. No penalties can be collected until appeals are resolved. If a pharmacy faces a charge of over $30,000, payments over this amount can be withheld during ongoing appeals. Additionally, interest doesn't accrue during the audit period, and unsupported audit findings must be dismissed.

This section clarifies that the Department of Consumer Affairs and the California State Board of Pharmacy do not have any control or oversight over the rules in this chapter.

This law mandates that pharmacy benefit managers (PBMs) who reimburse pharmacies using a maximum allowable cost (MAC) must follow certain rules. They need to tell pharmacies how drug prices are determined, update cost lists regularly, and help pharmacies challenge reimbursement rates. Drugs on these lists must meet specific criteria, such as being sufficiently available and not obsolete. PBMs must address appeals from pharmacies about drug costs within set timelines and correct any cost discrepancies found. Also, pharmacies cannot share specific cost information they receive with anyone else.

This law section sets rules for contracts involving pharmacy benefit managers (PBMs), which are entities that handle prescription drug benefits. It explains key terms like labelers and proprietary information and ensures that PBMs act honestly and fairly. PBMs must disclose important information to health plan sponsors about drug prices, rebates, and fees. They can't discourage these sponsors from seeking such details. PBMs also have to inform pharmacies about significant contract changes and can't penalize them for suggesting cheaper drug alternatives to patients. Some entities, like health insurers that manage their own benefits, aren't covered by this law. If any part of the law is invalid, it doesn't affect the rest.