HB1643 establishes a detailed statutory framework governing audits of records for registered pharmacists and pharmacies in Hawaii. It requires audit requests to be in writing, gives pharmacies advance notice before on-site audits, limits the audit period to two years in most cases, and requires preliminary and final audit reports to be issued within specified timeframes. The bill also requires audits involving clinical or professional judgment to be reviewed with a pharmacist, creates an appeals process for unfavorable findings, and restricts the use of extrapolation in calculating recoupments or penalties.
The measure further limits when recoupments may be imposed and how they are calculated. Clerical or recordkeeping errors alone cannot be treated as fraud or used as the basis for recoupment unless they cause an actual overpayment or wrong medication dispensing, and disputed funds may not be recovered until the audit process is complete. The bill also allows pharmacies to validate claims using legally valid prescriptions and certain provider records, protects dispensing fees in many recoupment situations, and permits pharmacies to dispense and be reimbursed for the full quantity of the smallest commercially packaged product in certain cases such as insulin, eye drops, and topical products. It also restricts sharing audit information between pharmacy benefit managers, except in fraud-related investigative audits.
In addition to the audit rules, HB1643 amends the definition of “pharmacy benefit manager” in chapter 431S to exclude health maintenance organizations that are part of a fully integrated delivery system where enrollees primarily use pharmacies owned and operated by the HMO. This narrows the scope of entities treated as PBMs under the statute and clarifies that the new audit section does not apply to the Department of Health.
The overall sentiment reflected in the voting history appears strongly supportive and largely noncontroversial. The bill passed Senate committees, conference committee, and House conference unanimously or near-unanimously, with no recorded dissenting votes in the provided history. That pattern suggests broad agreement on the need to standardize pharmacy audits and protect pharmacies from overly aggressive recoupment practices.
The main points of contention inherent in the bill concern the balance between audit oversight and pharmacy protections. Pharmacies and pharmacists benefit from limits on extrapolation, longer response periods, and restrictions on recoupment for technical errors, while insurers, pharmacy benefit managers, and other auditing entities may view the bill as constraining their ability to detect and recover improper payments. The exclusion of certain integrated HMOs from the PBM definition is another notable policy choice, likely intended to distinguish vertically integrated delivery systems from external PBM operations.
HB1643 adds a new section to chapter 461, Hawaii Revised Statutes, creating enforceable audit standards for pharmacies and registered pharmacists and limiting how audits, recoupments, and appeals may be conducted by the State, counties, insurers, HMOs, PBMs, and related entities. It also amends chapter 431S to broaden and clarify the definition of “pharmacy benefit manager,” while expressly excluding certain integrated health maintenance organizations. The bill affects pharmacy reimbursement practices, audit procedures, recoupment authority, and the treatment of clerical errors, dispensing fees, and days-supply calculations.
The bill appears to have enjoyed broad bipartisan or cross-committee support, with unanimous or near-unanimous votes in the Senate Health and Human Services Committee, Senate Commerce and Consumer Protection Committee, and both conference committees. No opposition is reflected in the provided voting record or transcripts, suggesting the measure was viewed as a technical but important consumer/provider protection bill rather than a controversial policy fight.
The central policy tension is between pharmacy audit reform and payer oversight. Pharmacies and pharmacists are protected by notice requirements, limits on extrapolation, time to cure errors, and restrictions on recoupment for clerical mistakes, while PBMs, insurers, and other auditors may be constrained in their ability to recover overpayments or use audit findings broadly. Another potential point of contention is the carve-out excluding certain integrated HMOs from the PBM definition, which may affect how those entities are regulated and whether they are subject to the same audit rules as external PBMs.