N.Y. Comp. Codes R. & Regs. tit. 9, § 9800.8 – Audit and claim review.

(a) Providers shall be subject to audit by the panel, the executive director, their agents or the contractor. With respect to such audits the provider may be required:
1. (1) to reimburse the contractor for overpayments discovered by audits; and
2. (2) to pay restitution for any direct or indirect monetary damage to the program resulting from their improperly or inappropriately furnishing covered drugs.
(b) The panel, the executive director, their agents or the contractor may conduct or have conducted audits and claims reviews which may be limited to reviews of costs of operation or validity of claims submitted, and adherence to accepted pharmacy practices and established contractor policy and procedures, conduct therapeutic drug monitoring reviews applying accepted pharmaceutical practice standards or conduct investigations as to the provider's conduct relative to fraud or abuse.
(c) The contractor upon prepayment review, or therapeutic drug monitoring review, may deny claims, adjust claims to eliminate noncompensable items or to reflect established rates or fees, pend claims for review, or approve the claim for payment, subject to post-payment audit and verification.
1. (1) For claims denied as a result of therapeutic drug monitoring reviews, as a condition for payment, the provider must submit information indicating that the pharmacist has either reviewed the questioned prescription(s), consulted with the participant or interacted with the prescribing physician. Information submitted must describe any actions taken as a result of such review, consultation or interaction to deter or prevent the incorrect or unnecessary consumption of a therapeutic agent.
2. (2) For claims denied as a result of suspected excessive quantities, providers must submit, as a condition for payment, additional dispensing information, such as the dose prescribed, which justifies the quantities billed.
(d) Where the contractor's analysis of claims or initial onsite audit findings indicate that a provider has claimed or is claiming for covered drugs which may be inconsistent with regulations governing the program or with established standards for quality, or which are otherwise inappropriate, payment of all claims submitted and of all future claims may be delayed or suspended, upon the written approval of the executive director, pending completion of an investigation upon approval of the executive director. A notice of the withholding of payment shall be sent to the provider contemporaneous with withholding of payments.