(a) All providers participating in the Vendor Drug Program (Program) are subject to periodic audits by the Texas Health and Human Services Commission (the Commission) or contractors for the Centers for Medicare & Medicaid Services.
(b) Audits determine provider compliance with all state and federal program policies, procedures, and limitations as well as compliance with the requirements outlined in the provider's contract. Data for transactions selected for audit are compared with data on the corresponding prescriptions. Erroneous payments and overpayments that occur because of noncompliance with Program requirements are considered exceptions subject to restitution to the Commission.
(c) If a provider disagrees with the initial findings of an audit, the provider may present additional documentation to the auditor for review within 15 calendar days of the provider's receipt of the draft audit report. No additional documentation is accepted after this time. The auditor considers the additional documentation before issuing the Final Audit Report.
(d) If the provider disagrees with the Final Audit Report and wants to appeal, and the findings of the audit do not include findings that the pharmacy engaged in Medicaid fraud, the Commission's Appeals Division, upon receipt of written request, provides an informal hearing. The Commission's Appeals Division must receive the written request for an informal hearing within 15 calendar days of the provider's receipt of the Final Audit Report.
(e) An administrative law judge (ALJ) from the Commission's Appeals Division conducts hearings requested under subsection (d) of this section in an informal manner. Unless specified by the ALJ and at the ALJ's sole discretion, neither the Texas Rules of Civil Procedure nor the Texas Rules of Evidence or any other procedural or evidentiary rules apply. The ALJ only considers data or documentation provided to the auditors on or before the time specified in subsection (c) of this section. The ALJ makes the final decision. Vendor Drug Program staff who have expertise in the law governing pharmacies' participation in Medicaid are available to the ALJ to answer questions.

Source Note: The provisions of this §354.1891 adopted to be effective November 16, 1987, 12 TexReg 3553; transferred effective September 1, 1993, as published in the Texas Register September 7, 1993, 18 TexReg 5978; transferred effective September 1, 2001, as published in the Texas Register May 24, 2002, 27 TexReg 4562; amended to be effective June 19, 2003, 28 TexReg 4543; amended to be effective February 25, 2016, 41 TexReg 1221