Shown verbatim: the complete text as captured from the official page posted by the Hawaii State Legislature, fetched 2026-08-29. Where this bill amends existing law, language marked for deletion in the official page appears here in brackets. This is the first conference draft. The official bill page.
HOUSE OF REPRESENTATIVES H.B. NO. 1643 THIRTY-THIRD LEGISLATURE, 2026 H.D. 2 STATE OF HAWAII S.D. 2 C.D. 1 A BILL FOR AN ACT RELATING TO PHARMACY. BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF HAWAII: 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 registered pharmacist or pharmacy. (a) All requests for an audit of records of a registered pharmacist or pharmacy shall be made in writing and include a requirement that the registered pharmacist or pharmacy provide a signature acknowledging receipt of the notice of request for an audit. When an audit of records of a registered 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 electronic notice shall be given to the registered pharmacist or pharmacy at least two weeks before conducting the on-site audit for each audit cycle and shall include a list identifying the prescriptions subject to audit by prescription number, which may be partially masked, including the last two digits, or a date range sufficient to identify the claims, and date of fill; (2) Any audit performed under this section that involves clinical or professional judgment shall be conducted in consultation with a registered 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 registered pharmacist or pharmacy may use the records of a hospital, physician, dentist, veterinarian, advanced practice registered nurse, or other authorized health care provider 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 drug 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; provided that 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 registered pharmacist or pharmacy; (6) Each registered pharmacist or pharmacy shall be audited under the standards and parameters as other similarly situated registered 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 registered pharmacist or pharmacy shall be allowed the length of time described in the registered pharmacist's or pharmacy's contract or provider manual following receipt of the preliminary audit report to produce documentation to address any discrepancy found during an audit. A registered 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 registered pharmacist's or pharmacy's contract or provider manual does not specify the allowed length of time for the registered pharmacist or pharmacy to address any discrepancy found in the audit following receipt of the preliminary report, then that registered pharmacist or pharmacy shall be allowed no less than sixty 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 regulation; (9) An audit shall not be initiated or scheduled during the first seven calendar days of any month, unless otherwise consented to by the registered pharmacist or pharmacy; (10) The preliminary audit report shall be delivered to the registered pharmacist or pharmacy within one hundred twenty days after conclusion of the audit. A final audit report shall be delivered to the registered 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, no audit of a registered pharmacist or pharmacy shall use the accounting practice of extrapolation in calculating recoupments or penalties for audits; (12) Any recoupment related to clerical or recordkeeping errors shall not include the cost of the drug or dispensed product except in the following cases: (A) Fraud or other intentional and wilful misrepresentation; (B) Dispensing in excess of the pharmacy benefit contract established by a plan sponsor; or (C) Prescriptions not filled in accordance with the prescriber's order; and (13) The absence of documentation necessary to substantiate the validity of the claim, including but not limited to a valid prescription or drug acquisition record, shall not be considered a clerical or recordkeeping error. (b) Recoupment of claims shall only be applied to prescriptions disclosed in the audit and shall not be extrapolated to apply to other prescriptions. (c) Recoupments of any disputed funds shall only occur after final internal disposition of the audit, including the appeals process as set forth in subsection (d). (d) Each pharmacy benefit manager conducting an audit shall establish an appeals process under which a registered 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 registered 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. (e) A registered pharmacist or pharmacy may be allowed to reverse and rebill prescriptions due to clerical changes during the correction time frame of the audit. (f) 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. (g) 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. (h) 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. (i) 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 because 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. (j) 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. (k) 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. (l) 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. (m) Subsections (f) to (l) shall not apply to any investigative audit that involves allegations of fraud or wilful misrepresentation. (n) This section shall not apply to the department of health. (o) For the purposes of this section, "pharmacy benefit manager" has the same meaning as in section 431S-1." SECTION 2. Section 431S-1, Hawaii Revised Statutes, is amended by amending the definition of "pharmacy benefit manager" to read as follows: ""Pharmacy benefit manager" means any person that performs pharmacy benefit management, including but not limited to a person or entity in a contractual or employment relationship with a pharmacy benefit manager to perform pharmacy benefit management for a covered entity. "Pharmacy benefit manager" does not include a health maintenance organization that is part of a fully integrated delivery system in which enrollees primarily use pharmacies that are owned and operated by the health maintenance organization." SECTION 3. New statutory material is underscored. SECTION 4. This Act shall take effect upon its approval.
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