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2018 Budget Update on Fair Audits
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New York Public Health law now provides a definition of “Pharmacy Benefit Manager”. The newly approved New York State budget includes requirements regarding the audit of pharmacy records by PBM’s.  Here are details about these requirements which became effective April 1, 2018.


  • 15 days prior written notice to pharmacy with delivery confirmation to PBM
  • NO audits in first 3 days of any calendar month
  • Preliminary report to pharmacy within 45 days after audit
  • Pharmacy then has 45 days to address discrepancies
  • Final Report from PBM due within 60 days of the initial report
  • PBM must consider reasonable requests for deadline extension from a pharmacy requiring additional time to gather supporting documentation

Example of Date Limits for Audits

Notice of Audit

Audit Date

Initial Audit Report Due

Pharmacy must contest by

Final Audit Report Due

June 1st

June 16th

July 31th

September 14th

September 29th



  • Audit limited to 100 prescriptions (except in fraud cases).
  • Can only audit Rx for 2 years after claim submission.
  • Written notice must include Rx numbers.  Last 2 digits may be omitted.
  • Payment cannot be denied for unintentional clerical errors that do not result in financial burden, provided the Rx is filled correctly (patient, drug, dose, quantity).


  • PBM must use the written and verifiable records of a hospital, physician, or other authorized practitioner to validate pharmacy records.
  • PBM is required to provide a means for the pharmacy to contest findings


  • Prescription drugs – Auditor must accept invoices from any wholesaler registered with the State Education Department
  • Other (e.g. DME, wound care, etc.) – Auditor must accept invoices from an authorized distributor other than a wholesaler.

EXCLUSIONS – These laws DO NOT apply to:

  • Audits initiated due to suspicions of intentional fraud.
  • Audits of claims paid for by federal programs such as Medicare, Medicaid and Tricare.
  • Audits initiated prior to April 1, 2018.


  • PBM compliance may take some time due to the immediate nature of the law’s effective date.
  • Document any alleged violations.
  • Guardianship of enforcement has not yet been determined.
  • PSSNY will keep you updated regarding reporting and oversight.


PSSNY, 210 Washington Avenue Extension, Albany, NY 12203 * 800-632-8822 *