An audit of the records of a pharmacy by an entity shall be conducted in accordance with the following criteria: (1) the entity conducting the initial on-site audit shall give the pharmacy notice at least two weeks prior to conducting the initial on-site audit for each audit cycle; (2) an audit that involves clinical or professional judgment shall be conducted by or in consultation with a pharmacist; (3) a clerical or record-keeping error, regarding a required document or record, shall not necessarily constitute fraud but such a claim: (a) may be subject to recoupment; and (b) shall not be subject to criminal penalties without proof of intent to commit fraud; (4) a pharmacy may use the records of a hospital, physician or other authorized practitioner of the healing arts for drugs or medicinal supplies written or transmitted by any means of communication for purposes of validating the pharmacy record with respect to orders or refills of a dangerous drug or controlled substance; (5) a finding of an overpayment or underpayment shall not 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 and recoupment of claims shall be based on the actual overpayment or underpayment unless the entity demonstrates a statistically justifiable method of projection or the projection for overpayment or underpayment is part of a settlement as agreed to by the pharmacy; (6) each pharmacy shall be audited under the same standards and parameters as other similarly situated pharmacies audited by the entity; (7) a pharmacy shall be allowed at least 21 business days, with reasonable extensions allowed, following receipt of the preliminary audit report in which to produce documentation to address any discrepancy found during an audit; (8) the period covered by an audit shall not exceed two years from the date the claim was submitted to or adjudicated by an entity; (9) an audit shall not be initiated or scheduled during the first five calendar days of a month due to the high volume of prescriptions filled during that time unless otherwise consented to by the pharmacy; (10) the preliminary audit report shall be delivered to the pharmacy within 120 days, with reasonable extensions allowed, after conclusion of the audit, and the final report shall be delivered to the pharmacy within six months after receipt of the preliminary audit report or final appeal; (11) the entity conducting the audit shall not use the accounting practice of extrapolation in calculating recoupments or penalties for audits; (12) recoupment of any disputed funds shall occur after final internal disposition of the audit, including the appeals process (unless the identified discrepancy exceeds $25,000); and (13) each entity conducting an audit shall establish an appeals process under which a pharmacy may appeal an unfavorable preliminary audit report to the entity. This section does not apply to any investigative audit that involves probable or potential fraud, willful misrepresentation.

Link to Existing Law: N.M.S.A. 61-11-18.2

This is a fairly basis audit law, without limitations on the number of prescriptions subject to an audit or restrictions on recouping on clerical errors. Additionally, the auditing entity is responsible for establishing the appeals protocols.