AN ACT RELATING TO BUSINESSES AND PROFESSIONS -- PHARMACIES (Strengthens enforcement of the state's pharmacy audit law by clarifying and tightening audit procedures to ensure pharmacy audits are conducted fairly and transparently.)

H8382

2026 -- H 8382
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LC006204
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STATE OF RHODE ISLAND
IN GENERAL ASSEMBLY
JANUARY SESSION, A.D. 2026
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A N A C T
RELATING TO BUSINESSES AND PROFESSIONS -- PHARMACIES

Introduced By:
Representatives Kislak, McGaw, Donovan, Corvese, Cruz, Giraldo,
Potter, Fogarty, and Stewart

Date Introduced:
April 01, 2026

Referred To:
House Health & Human Services
(Attorney General)
It is enacted by the General Assembly as follows:
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SECTION 1. Section 5-19.1-35 of the General Laws in Chapter 5-19.1 entitled
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"Pharmacies" is hereby amended to read as follows:
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5-19.1-35. Audits.
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(a)
For the purposes of this section:
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(1) “Audit” means a systematic review of provider claims, documentation, and billing
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practices, whether conducted remotely or on site, for the purported purpose of ensuring payments
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are made for covered, reasonable, and necessary services, or to detect fraud, waste, and abuse, or
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to recover overpayments.
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(2) “Auditor” means a person or entity who conducts an audit as defined in subsection
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(a)(1) of this section.
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(b)
When an
on-site
audit of the records of a pharmacy is conducted by a carrier or its
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intermediary, the audit must be conducted in accordance with the following criteria:
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(1) A finding of overpayment or underpayment must be based on the actual overpayment
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or underpayment, and not a projection based on the number of patients served having a similar
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diagnosis, or on the number of similar orders or refills for similar drugs, unless the projected
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overpayment or denial is a part of a settlement agreed to by the pharmacy or pharmacist;
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(2) The auditor may not use extrapolation in calculating recoupments or penalties unless
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required by state or federal laws or regulations;
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(3) Any audit that involves clinical judgment must be conducted by, or in consultation with,

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a pharmacist; and
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(4) Each entity conducting an audit shall establish an appeal process under which a
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pharmacy may appeal an unfavorable preliminary audit report to the entity.
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(b) This section does not apply to any audit, review, or investigation that is initiated based
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on or involving suspected or alleged fraud, willful misrepresentation, or abuse.
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(c) Prior to an audit, the entity conducting an audit shall give the pharmacy fourteen (14)
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days advance written notice of the audit and the range of prescription numbers involved in the audit.
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The carrier or its intermediary may mask the last two digits of the numbers. Additionally, the
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number of prescriptions shall not exceed one hundred fifty (150) prescription claims and their
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applicable refills. The time allotted must be adequate to collect all samples. The examination of
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signature logs shall not exceed twenty-five (25) signature logs in number.
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(d) A pharmacy has the right to execute the dispute resolution contained in their contract.
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(e)(1) A preliminary audit report must be delivered to the pharmacy or its corporate office
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within sixty (60) days after the conclusion of the audit. A pharmacy must be allowed at least thirty
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(30) days following receipt of the preliminary audit
report
to provide documentation to address any
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discrepancy found in the audit. A final audit report must be delivered to the pharmacy or its
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corporate office within ninety (90) days after receipt of the preliminary audit report or final appeal,
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whichever is later. A charge-back recoupment or other penalty may not be assessed until the appeal
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process provided by the pharmacy benefits manager has been exhausted and the final report issued.
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If the identified discrepancy for a single audit exceeds twenty-five thousand dollars ($25,000),
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future payments in excess of that amount may be withheld pending the adjudication of an appeal.
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Auditors shall only have access to previous audit reports on a particular pharmacy conducted for
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the same entity.
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(2) Auditors may initiate a desk audit prior to an on-site audit unless otherwise specified in
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the law.
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(3)
(2)
Contracted auditors cannot be paid based on the findings within an audit.
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(4)
(3)
Scanned images of all prescriptions including all scheduled controlled substances
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are allowed to be used by the pharmacist for an audit. Verbally received prescriptions must be
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accepted upon validation by the auditing entity and applicable for the
initial desk or on-site
audit.
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(5)
(4)
The period covered by an audit may not exceed two (2) years.
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(6)
(5)
Within five (5) business days of receiving the audit notification, pharmacies are
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allowed, at a minimum, one opportunity to reschedule with the auditor if the scheduled audit
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presents a scheduling conflict for the pharmacist.
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(f) Any clerical error, typographical error, scrivener’s error, or computer error regarding a

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document or record does not constitute a willful violation and is not subject to criminal penalties
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without proof of intent to commit fraud.
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(g)
Limitations.
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(1)
Exceptions.

The

Subject to subsection (g)(2) of this section, the
provisions of this
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chapter do not apply to an investigative audit of pharmacy records when:
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(i) Fraud, waste, abuse, or other intentional misconduct is indicated by physical review or
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review of claims data or statements; or
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(ii) Other investigative methods indicate a pharmacy is or has been engaged in criminal
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wrongdoing, fraud, or other intentional or willful misrepresentation.
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(2) Scope of exceptions.
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(i) An audit for which an exception is applicable shall be strictly limited in scope to the
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issue(s) directly giving rise to the suspicions, allegations, or conduct indicated by other
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investigative methods. Before conducting an audit for which an exception is applicable, the auditor
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shall memorialize in writing the basis for any exception hereunder, which shall include a
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description of the specific issue(s) under review and facts giving rise to the audit, and shall make
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such writing available to the attorney general upon request.
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(ii) The auditor may not rely solely on a finding of common control or common ownership
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as a basis for conducting an audit to which an exception applies with respect to a pharmacy, unless
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the auditor first confirms the presence of an identified systemic error, fraud, abuse, willful
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misrepresentation, or criminal wrongdoing with respect to a pharmacy under common control or
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common ownership.
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(2)
(3)

Frequency of audits.
A pharmacy shall not be subject to more than one
on-site
audit
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in connection with a carrier every twelve (12) months, unless there is an identified problem or
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substantial evidence of
fraud
, abuse,

or
misrepresentation
is suspected
, or other criminal
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wrongdoing
.
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(3)
(4)

Federal law.
This chapter does not supersede any audit requirements established by
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federal law.
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(5) Notice to the attorney general. Prior to initiating an audit pursuant to an exception under
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subsection (g)(1) of this section, the auditor shall provide written notice to the attorney general of
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their intent to conduct an audit pursuant to an applicable exception. Such notice shall be provided
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at least three (3) business days prior to the initiation of the audit.
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(h)
Enforcement.
The
Rhode Island
attorney general shall have the authority to enforce
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and ensure compliance with this section.
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(1) The attorney general may institute proceedings to prevent and restrain violations of this

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section. The superior court shall have jurisdiction to prevent and restrain violations of this section.
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(2) In addition to injunctive relief, any person or entity in violation of this section shall be
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liable for a civil penalty, in an action brought by the attorney general, of not more than ten thousand
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dollars ($10,000) for each violation.
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(3) The attorney general may promulgate rules and regulations to implement the provisions
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of this section.
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SECTION 2. This act shall take effect upon passage.
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EXPLANATION
BY THE LEGISLATIVE COUNCIL
OF
A N A C T
RELATING TO BUSINESSES AND PROFESSIONS -- PHARMACIES
***
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This act would strengthen enforcement of the state's pharmacy audit law by clarifying and
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tightening audit procedures to ensure pharmacy audits are conducted fairly and transparently.
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This act would take effect upon passage.
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